BAE Systems has forecast record profits as its Barrow shipyard aims to almost double its workforce over the next few years.
The firm – which is Britain’s biggest defence company – said the Ukraine war and increasing uncertainty in the Asia-Pacific region had increased its financial outlook.
It is forecasting annual growth of between 10 and 12 per cent this year, as governments spend more in ‘an increasingly uncertain world’.
The Barrow shipyard is part of its maritime arm. It has recently begun construction on the third of four Dreadnought submarines for the Royal Navy.
The Dreadnought class is the UK’s nuclear deterrent and carries Trident missiles, with at least one nuclear submarine on active duty at all times.
The Barrow site also supplies the Royal Navy with Astute class submarines – a powerful attack vessel that can strike targets from up to 1,000km away.
The firm is investing in training and said it aimed to increase the workforce to 17,000 in the coming years.
BAE launched its £25 million submarines academy for skills and knowledge in 2018, and a partnership with Furness College helps recruit new apprentices and early career starters every year.
In its half-yearly report, published on Monday, BAE Systems said it secured £21.1 billion of orders in the six months to June 30, taking its backlog of orders to a record high of £66.2 billion.
During this period, BAE received new orders from the Czech Republic defence forces for 246 infantry fighting vehicles (worth £1.8 billion), and from the Polish military to supply rocket launchers and missiles.
Charles Woodburn, chief executive of BAE Systems, said: “Our global footprint, deep customer relationships and leading technologies enable us to effectively support the national security requirements and multi-domain ambitions of our government customers in an increasingly uncertain world.
“With a record order backlog and good operational performance, we’re well positioned to continue delivering sustained growth in the coming years.”
Other key findings from the report include:
- 11% rise in half-year sales to £12 billion, while its underlying earnings rose by 10% to £1.3 billion.
- Pre-tax profits for continuing operations jumped to £1.2 billion in the first half of 2023 from £779 million a year earlier.
- 11% increase in its interim dividend to 11.5p.
- For 2023, BAE said earnings per share would grow 10 – 12%, compared to the 5% – 7% increase it had forecast in February, while it also lifted sales guidance to 5% to 7% growth from 3% to 5%.
Following the publishing of the report, shares in BAE Systems jumped 5% in early deals. The stock has risen 19% over the last 12 months.
Brad Greve, group finance director, said: “This is a strong set of half-year results delivering good sales and earnings growth, and giving us confidence to increase our year-end guidance for sales, underlying EBIT, underlying earnings per share and free cash flow.
“The record order backlog and continued good operational performance gives us more visibility and confidence in our three financial priorities – sales growth, margin expansion and high sustained cash conversion, operating under a disciplined capital allocation policy.”
