21st Feb 2024 12:03
(Alliance News) - BAE Systems remains well-positioned after "strong" results which contained a "record" order book and "staggering" order backlog, amid increased global interest for its weapons systems.
The defence, aerospace and security company said pretax profit climbed 17% to GBP2.33 billion in 2023 from GBP1.99 billion a year prior.
Revenue grew 8.6% to GBP23.08 billion from GBP21.26 billion.
BAE recommended a final dividend per share of 18.5p for 2023, taking the total to 30.0p, up 11% from 27.0p paid for 2022.
The order book meanwhile rose 19% to GBP58.0 billion from GBP48.9 billion. The company cited M777 deployments to Ukraine and increased interest from armies around the world.
The order backlog increased to GBP69.8 billion from GBP58.9 billion.
Berenberg described the results as "strong", with headline profit and loss metrics slightly ahead of consensus.
Two elements of the release were particularly noteworthy, Berenberg said.
First, the 41% beat on free cash flow, which contributed to a near halving in net debt; and second the record order intake which has increased the backlog to GBP70 billion.
Guidance for 2024 guidance was broadly in line with expectations, although Berenberg pointed out that the Air Astana IPO proceeds of around GBP200 million are not included in the FCF guidance, implying some scope for outperformance.
The broker noted the release contains positive commentary about the "sustainability of growth in the coming years, supported by our expectation that we are entering a long defence upcycle, which we expect to be well received".
Berenberg said sales beat the company-compiled consensus by 2%, led by Maritime, which grew by 22%.
Underlying earnings before interest and tax increased by 9%, in line with consensus, while the 14% growth in earnings per share was 1% better than expected.
The broker said the FCF outperformance was driven by increased advances and good cash management. Net debt nearly halved in the year to GBP1.02 billion, it noted.
The 11% increase to the dividend was 1% ahead of consensus, Berenberg added.
There was good news on 2024 guidance for revenue of 10-12%, which was ahead of 9% consensus, with Ebit growth expected to be 11-13%, above the 11% consensus, driven by margin expansion in Platforms & Services in particular.
Natalya Davies, associate analyst at Edison Group felt the results show BAE remains "well-positioned to meet the evolving needs of its customers while delivering sustained value to its shareholders and communities worldwide".
She highlighted the record order intake and "staggering" backlog.
"The company's strategic initiatives, including the acquisition of Ball Aerospace and its expansion efforts, further solidify its position to capitalise on emerging opportunities in the defence and aerospace sectors", she said.
Last Friday, BAE Systems completed the USD5.5 billion acquisition of Ball Aerospace from Ball Corp.
The deal was first announced in August 2023.
Shares in BAE Systems fell 2.9% to 1,217.01 pence in London on Wednesday.
By Jeremy Cutler, Alliance News reporter
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