Defence group BAE Systems (
www.baesystems.com) has reported rising sales and profits for the first half of 2017, but it is not changing its forecast for the full year, despite hopes that its order book may be boosted by an increase in US defence spending.
Revenues for the six months to the end of June were up 8.9% at £9.01 billion, with pre-tax profits rising more than a third to £714 million.
On BAE’s preferred measure of profit — underlying earnings — the increase was 11% to £945 million, although the company said that once the effects of the weaker pound were accounted for, the rise was a more modest 5%.
Charles Woodburn, the chief executive who took control last month, said there would not be major changes under his leadership. “It’s much more a case of evolution than revolution. Our strategy is good, but there are three areas in which I wish to push harder — operational excellence, competitiveness and technology.”
Mr Woodburn has already started working on competitiveness, with the appointment of a chief procurement officer.
He also said that the USA, which makes up about a third of BAE’s sales, “signalled good future opportunities, with expected improvement in the defence budget outlook” under President Trump, but he cautioned that any increases in military spending would take time to flow through into the company’s order book.
Mr Woodburn said there was no sign of a long-awaited further export order from Saudi Arabia for Typhoon fighter jets, which would keep the production line running as current orders are completed.
He is “confident” of further orders for the jet, but he has not given any indications of timing, adding that this situation is not of immediate concern to the company, as it earns as much from supporting Typhoons in service as it does making them.”
BAE recently signed orders with the UK Government to start building the first three of an expected total of eight Type 26 frigates for the Royal Navy and Mr Woodburn said these could lead to potential export orders for similar vessels, with both Australia and Canada looking to ‘beef up’ their navies.