Defence giant expects good second half as demand stays high

Typhoon jets

BAe Systems expects to have a good second half to the year after delivering an increase in revenues despite the pandemic.

The aerospace group, which has major sites at Warton and Samlesbury, said it was able to build on a “strong position” at the start of the year to increase revenues by 5% to £9.87bn.

However its underlying EBITA – a measure of operating profitability – was down 10% at £895m in the six months to June.

Charles Woodburn

BAe Systems’ chief executive Charles Woodburn said: “Assuming no significant COVID-19 resurgence, we expect a good second half to the year.

“Demand for our capabilities remains high and we recognise our role not only in supporting national security, but also in contributing to the economies of the countries in which we operate.”

While its forecasts are subject to the uncertainty of the coronavirus pandemic and geopolitical problems, it is expecting a small increase in sales for the full year. Increased volumes in F-35, Combat Vehicles and growth in its electronic defence portfolio are offsetting the shortfall in commercial businesses.

However it also expects its underlying earnings per share to slip by a “mid-single digit percentage” from last year’s 45.8p, assuming there is no significant change in current exchange and tax rates, and geographic mix of profits.

BAe Systems employs 12,500 people across its air sector and said “a majority of employees continue to work remotely”, although a reconfiguring of its on-site facilities has enabled “a sizeable population” to return to its sites.