BAE Systems has announced that it is on track to meet full-year guidance, with air, maritime, electronic systems, intelligence and security performing strongly.
The market update stated that while there were still uncertainties arising from the Covid-19 pandemic, progress in combatting the virus through vaccination programmes in the company’s major markets and good operational performance underlines overall confidence in the full year guidance.
Focus for 2021 – “driving operational performance”
Charles Woodburn, BAE Systems Chief Executive, said the company had continued to “perform and adapt” during the pandemic. “Our focus for 2021 is driving operational performance, progressing our sustainability agenda and investing in and developing the technologies to meet our customers’ needs.
He added: “Our good operational performance underlines our confidence in the full year guidance for top line growth and margin expansion and our three-year cash targets. Strategically, our geographically diverse portfolio is aligned to growing defence budget areas; we’re ramping up investment in self-funded R&D aligned to customer focus areas and we’re leveraging our leading capabilities in evolving markets to ensure we’re increasingly well placed to deliver for all our stakeholders.”
The statement added Air, Maritime, Electronic Systems and Intelligence and Security continue to perform strongly and there is positive momentum in Platforms & Services (US).
Defence spending increased to counter challenging threats
The market update included an outlook on defence spending in key markets. The update read: “Our geographic diversity positions us strongly in the post pandemic cycle where many of the countries we operate in have made plans to increase their spending to counter challenging threat environments.”
BAE Systems is prominent on many of the most important long-term defence programmes for the US armed forces with top line defence funding of $715bn for 2022 representing a relatively stable funding level. In the UK, the publication of the Defence Command Paper was positive for the Group with renewed commitments to our major long-term programmes in complex warship, submarine and combat aircraft design and build, allowing for long-term investment in key sovereign capabilities, as well as strong support for cyber. The statement added: “The opportunity pipeline is positive with domestic, export and collaboration opportunities identified, and we have capabilities to support our UK customer in its space ambitions.”
Strategy to increase R&D investment
In Europe, a number of nations including Germany and France continue to increase defence budgets to address the threat environment and move towards their 2 per cent of GDP NATO commitments. The portfolio was also well positioned to benefit from increased defence spending in Asia Pacific through BAE’s Australia business.
The company completed the acquisition of high-end electronics manufacturer Pulse Power and Measurement Limited (PPM) in March in line with its strategy to increase R&D investments into technology and to complement the Group’s digital and data capabilities. In April, BAE Systems completed the sale of another electronics business, Rokar, to Elbit Systems.
The company has progressed its 2030 greenhouse gas net zero programme with assessment of the impacts associated with its products, opportunities through future technology and the supply chain.
BAE Systems will announce its interim results for the half year ending 30 June 2021 on 29 July 2021.