BAE Systems plc (LON:BA)’s underlying sales of £10bn were up 6% at constant exchange rates (CER). That reflected growth across all segments. Underlying operating profits were up 27% at CER to £1bn, with underlying earnings-per-share (EPS) of 21.9p.
Taking the impact of currency headwinds into account, the group expects full year sales growth between 3% and 5% and profit growth of 6% to 8%. EPS are seen increasing between 3% and 5%, and the group plans to deliver over £1bn in operating free cash flow.
At the 2021 SALT New York conference, which was held earlier this week, one of the panels on the main stage discussed the best macro shifts coming out of the pandemic and investing in value amid distress. The panel featured: Todd Lemkin, the chief investment officer of Canyon Partners; Peter Wallach, the managing director and Read More
The interim dividend rose 5.3% to 9.9p. The board also approved a £500m buyback programme, set to begin immediately.
The shares were up 2.1% following the announcement.
Laura Hoy, Equity Analyst at Hargreaves Lansdown:
“BAE is rewarding shareholders for sticking out the uncertainty that came with operating through a pandemic with a 5% dividend hike and £500m buyback programme. The group fared better than most, maintaining its dividend and keeping debt in check, but the crisis dented demand for some of its commercial products which ultimately hit cash flow.
It seems the group is well on the road to recovery, though, with free cash back in the black and impressive profit growth of 27%, excluding the impact of currency headwinds. While BAE is primarily a defence play, the uptick in air travel will help the group build upon its strength—its commercial flight control business continued to suffer under the weight of travel restrictions and will offer a welcome tailwind as it things return to normal
With worries about a recession and cuts to defence spending budgets firmly off the table for now, we’re expecting BAE to continue gaining momentum and delivering shareholder returns in both the medium and long-term."
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