Defence giant BAE Systems today announced that it would kick off a £500m share buyback programme after its first half earnings topped £1bn.
The FTSE blue chip said that earnings totalled £1.03bn for the first half, up from £849m in the same period in 2020.
It also said that it would boost its interim dividend 5.0 per cent, from 9.4p to 9.9p.
Shares in the firm rose 2.6 per cent after the first couple of hours of trading.
Chief executive Charles Woodburn said: “We are well positioned for sustained growth in the coming years and are ramping up our investments in advanced technologies to deliver capabilities for our customers in the face of an evolving threat environment.”
Laura Hoy, equity analyst at Hargreaves Lansdown, said that the firm was rewarding its shareholders for sticking with it through the pandemic.
She said: “It seems the group is well on the road to recovery, though, with free cash back in the black and impressive profit growth of 27 per cent, excluding the impact of currency headwinds.
“While BAE is primarily a defence play, the uptick in air travel will help the group build upon its strength—its commercial flight control business continued to suffer under the weight of travel restrictions and will offer a welcome tailwind as it things return to normal
“With worries about a recession and cuts to defence spending budgets firmly off the table for now, we’re expecting BAE to continue gaining momentum and delivering shareholder returns in both the medium and long-term.“
Today’s results came as BAE announced that it had been awarded a new £250m contract by the Ministry of Defence (MoD) to progress the development of Tempest, the replacement fighter jet for the Typhoon.
The contract officially marks the start of the programme’s concept and assessment phase, BAE said.
During this phase the firm, along with partners Rolls-Royce, Leonardo, and MBDA, will design, evaluate and shape the final capability requirements of the new platform.
Commenting on the new contract, defence secretary Ben Wallace said: “Today marks a momentous step in the next phase of our Future Combat Air System, with a multi-million pound investment that draws on the knowledge and skills of our UK industry experts.
“Boosting our already world-leading air industry, the contract will sustain thousands of jobs across the UK and will ensure that the UK remains at the top table when it comes to combat air.”