Global tensions drive record orders for defence giant BAE Systems

BAE Systems Tempest fighter

Defence group, BAE Systems, reported increased sales and profits for the year to December 31, 2023, as global security tensions remain high.

The group operates factories in Warton and Salmesbury, near Preston, building military aircraft, as well as a submarine building facility in Barrow, and employs around 15,000 staff in the region.

Turnover for the year was £23.078bn, up from £21.258bn, while pre-tax profits of £1.940bn were compared with £1.674bn. The group has raised its dividend per share by 11% to 30p per share, reflecting the strength of the annual figures.

As governments increase spending on their defence budgets, BAE Systems enjoyed a record surge in orders, which are now at £37.7bn, up from £37.1bn, leading to an orders level of £58bn, compared with £48.9bn the previous year. It has a record orders backlog worth £69.8bn, up from £58.9bn.

After generating free cash flow of £2.6bn, including net cash flow from operating activities of £3.8bn, the group closed 2023 with cash of £4.1bn and net debt – excluding lease liabilities – of £1bn.

This places the business in a strong position to manage the financing associated with the Ball Aerospace acquisition which completed in February 2024.

Chief executive, Charles Woodburn, said: “We’ve delivered a strong operational and financial performance in 2023 and I’m extremely proud of the way our people have delivered cutting-edge equipment and services to our customers, working together with partners across our supply chain.

“Our performance, combined with our global footprint and record order intake, means we’re well-positioned for sustained growth in the coming years.

“We’ll keep driving the business forward, investing in new technologies, facilities and our people.”

He added: “This will help us deliver on our order backlog and help ensure our government customers stay ahead in an uncertain world, whilst delivering increased value to our shareholders and the communities where we operate.”

Earlier this month, BAE Systems announced it was recruiting for 2,700 apprenticeship and graduate roles, with 1,552 available in the North West of England.

However, this week it was revealed that the group has pulled plans for a new 440,000 sq ft Barrow submarine factory, less than six months after submitting an application for the scheme.

A BAE Systems spokesperson said: “We continue to explore a range of options to support the ongoing expansion of our Barrow site and the delivery of the Royal Navy’s submarine programme.

“While the land at Dova Way was one of a number of potential locations we had considered, we have decided not to pursue this option at this time.”

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