BAE Systems rides defence wave to dividend boost and record results
BAE Systems shareholders are set for a pay bump as the London-listed group has benefited from the wave of increased global defence spending.
Sales at Europe’s largest defence contractor rose 10 per cent to a record £30.7bn, while underlying profit grew 12 per cent to £3.3bn.
The group saw its total order backlog reach a historic high of £83.6bn, driven by customers’ demand for its portfolio of cutting-edge technologies and services.
BAE Systems grew its global workforce by 4,000, including more than 2,500 early-career employees in the group’s key markets.
The group has also increased its self-funded research and development (R&D) to £407m, with key areas of focus including electronic warfare, uncrewed systems, counter-drone systems, laser-guided weapons, synthetic training, electrification applications, and space solutions.
Shareholders are set for a 10 per cent increase in the total dividend for the year, rising to 36.3p.
This comes as defence spending in Europe has increased, with countries planning to combat the growing threat from Russia.
PM warns UK must ‘step up’ defence commitments
Earlier this week, Sir Keir Starmer warned that the UK needed to “step up” its defence commitments amid reports that he wants to ramp up the defence budget by tens of billions before the end of the decade.
After this announcement, investors piled into defence stocks on Monday, with BAE Systems rising three per cent.
Chief executive Charles Woodburn said, “In a new era of defence spending, driven by escalating security challenges, we’re well positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future.”
Aarin Chiekrie, equity analyst, Hargreaves Lansdown, explained: “With budgets in both the US and Europe set to continue rising in the coming years, BAE Systems looks to be sitting in a goldilocks position to benefit from both sides of the Atlantic.”
“For investors looking to get exposure to the defence sector, BAE Systems remains a compelling choice,” he added.