UK weapons maker BAE Systems reiterated annual guidance of 9% – 11% earnings growth as regional wars continued to boost its order book.<\/p>\n
“Around the world, security threats continue to grow, leading governments to increase defence spending,” the company said in a trading statement.<\/p>\n
\u201cWe expect significant opportunities across our business, including space systems, missile and air defence systems, drones and counter drone technology, electronic warfare, combat aircraft, combat vehicles, frigates and submarines, among other customer priorities.\u201d<\/p>\n
BAE expects sales growth of 7% – 9% on 2025\u2019s \u00a330.7bn and underlying operating profit growth of 9% – 11% on the \u00a33.3bn reported last year.<\/p>\n
\u201cA favourable backdrop for BAE Systems is old news for the market and the shares largely failed to fire after its latest update,” said Dan Coatsworth, head of markets at AJ Bell.<\/p>\n
\u201cSomewhat counterintuitively, defence stocks have taken a step back during the Iran conflict. As one of the top performing parts of the market heading into the crisis, they were an obvious place for investors to book profits as nervousness started to build. <\/p>\n
\u201cNews from elsewhere in the sector hasn\u2019t been uniformly positive and there have been rumblings about the role of drone warfare and whether this will render some of the big, heavy, expensive kit sold by the likes of BAE somewhat redundant. <\/p>\n
\u201cThere is little sign of that yet in BAE\u2019s statement \u2013 full-year guidance is unchanged from that given in February and the company can point to several significant contract awards since the start of the year. This offers some evidence that the talk, particularly in Europe, about bolstering military capabilities is translating into procurement action.”<\/p>\n
Reporting by Frank Prenesti for Sharecast.com<\/p>\n