BAE Systems Sees Reversal of Falling Earnings Despite Defence Spending Uncertainty

Uncertainty remains in defence budget settlements, particularly in the US, but BAE Systems' chief executive, Ian King, believes earnings per share will be marginally higher than in 2014. Share prices have risen to near record highs, driven by a rising dividend and improving prospects for the company's cyber and intelligence division.

Key Takeaways:

• BAE Systems expects earnings per share to be marginally higher than in 2014 despite uncertainty in defence budget settlements.
• The company's shares have risen to near record highs, driven by a rising dividend and improving prospects for its cyber and intelligence division.
• BAE's order backlog is down by £2.2 billion to £40.5 billion, and revenues were down 8% at £16.6 billion.
• The company's cyber and intelligence division is expected to grow by 30% next year as the war on terror and other enemies are increasingly waged digitally.
• BAE's chief executive, Ian King, believes defence spending remains a high priority in international markets, including the UK, where long-term contracts are seen as stable.
• In the US, President Obama's defence budget ambitions may be worn down by political cycle constraints.
• The company is looking for clarity on defence spending, with the odds favouring a hung parliament in the UK general election.

Statistics:

• Earnings per share expected to be marginally higher than in 2014.
• Shares have risen 3.5p to 525.5p, within a whisker of a high touched earlier in the month.
• Share price is 20p shy of its peak hit at the turn of the century.
• Share price is 60% higher than the level at which they were trading in 2012.
• Order backlog down by £2.2 billion to £40.5 billion.
• Revenues down 8% at £16.6 billion.
• Underlying operating profits down 11% at £1.7 billion.

Sources:

• "BAE claims reversal of falling earnings" by Neil Collins (The Sunday Times)
• "BAE Systems shrugs off defence spending fears" by [Author Name] (Source Not Provided)