BAE Systems: Weapons giant eyes £24.6bn revenue on ‘elevated threat’ environment

Investors are looking ahead to BAE Systems results next week, with the weapons giant set to cash in on a boom in global defence spending.

Markets are expecting full-year revenue to grow 6 per cent to £24.6bn, in line with the group’s prior 5-7 per cent guidance.

Conflict in Ukraine and the Middle East has bumped defence spending up Western government’s agendas and prompted a surge in profits at the likes of BAE, Rolls-Royce and Chemring.

Shares in BAE are up nearly 40 per cent over the last 12 months. In August, the Farnborough-based manufacturer lifted its annual profit forecast after it won a record £21.1bn in new orders over the first six months of 2023.

Analysts expect orders for BAE’s military tech, which includes anything from Eurofighter-Typhoon jets to nuclear submarines, to remain strong when it reports on Wednesday.

Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said: “Given the elevated threat environment, investors are anticipating that demand for BAE’s products and services has remained strong when the group announces full-year results next week.”

Investors are also hoping for an update on the FTSE-listed group’s £4.4bn acquisition of Ball Aerospace. Regulators gave the deal, which is the firm’s biggest ever, the green light on Wednesday and it will likely be settled in the first half of the year.

The acquisition of the spacecraft manufacturer brings BAE into the US space sector for the first time, as it looks to grow its portfolio of advanced technologies.

Chekrie added: “The deal should be settled in the first half of the year, and markets are cautiously optimistic that the combination of expertise and technology will be a good fit.

“Despite taking on new debt to fund the acquisition, the balance sheet’s likely to remain in good health. However, investors will be keeping an eye out for any updates to the group’s shareholder return plans, with the Ball Aerospace deal likely to put some pressure on cash resources in the near to medium term.”