BAE – Profits Grow Alongside Record Order Intakes

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BAE Systems plc (LON:BA)’s full-year revenues grew 8.9% to £21.3bn, reflecting growth in all segments. This included double-digit growth from the Electronic Systems division, which develops precision guidance and military flight controls. Underlying operating profits rose from £2.2bn to £2.5bn, ahead of consensus.

There was a record order intake of £37.1bn last year as many countries increased their defence budgets. This brings the total order backlog up to £59bn.

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Free cash flow rose marginally from £1.9bn to £2.0bn. The net debt position improved from £2.2bn to 2.0bn.

£793m worth of buybacks were made in 2022. A final dividend of 16.6p per share has been proposed, which if accepted would bring the full year total to 27.0p.

Looking to 2023, BAE expects underlying operating profits to grow in the 4% to 6% range.

The shares fell 1.2% following the announcement.

BAE's Earnings

Aarin Chiekrie, equity analyst at Hargreaves Lansdown:

“BAE saw its top line jet forward this year. And despite the turbulent times of late, underlying operating profits also rose as all its segments performed well. Its customers are governments whose budgets aren’t constrained by a recession in the same way that a typical consumer’s is.

And with many governments raising their defence budgets amid escalating global tensions, BAE is benefitting by capturing this extra spending. That’s reflected in a record order backlog that’s now sitting at a hefty £59bn. As these are typically long-cycle, with revenues spread over several years, it gives BAE multi-year revenue visibility.


An enviable asset to have in uncertain times, and the market seems to agree, with BAE being the biggest riser in the FTSE 100 over the past year – up nearly 50%.

But ultimately, the group’s profitability is based on its estimates of revenues and future costs. And the long-term nature of many contracts means that the related risks and costs can change over time too.

It’s turbulent energy costs and potential supply chain issue that are the main trip hazards currently. While we think BAE is in good shape to deliver on its long-term growth strategy, uncertainty around future costs will remain a risk.”

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