BAE Systems full-year profit, revenue rise as defence budgets recover

FTSE 100 defence group BAE Systems reported a rise in full-year profit before tax on Thursday, with revenue and order intake up as defence budgets recover.

For the year to the end of December, profit before tax jumped to £1.15bn from £1.09bn the year before, with revenue up to £17.79bn from £16.79bn.

Meanwhile, the order intake increased to £22.4bn from £14.9bn

The company declared a final dividend of 12.70p per share, taking the total payout to 21.30p, up 2% on the year.

For the year ending 31 December 2017, the company said it expects underlying earnings per share to be 5% to 10% higher than full-year underlying EPS in 2016 of 40.3p.

BAE said that following the two-year Bipartisan Budget Act signed in 2015, the defence market outlook in the US is improving with encouraging signs of a return to growth in defence budgets. It is also seeing the ramp-up of production on a number of the group's long-term programmes.

In the UK, the business continued to perform well, benefiting from good programme execution and stability in customer requirements following the UK Strategic Defence and Security Review in 2015.

BAE said that while the UK’s vote to leave the European Union continues to create economic uncertainty, good progress has been achieved in implementing the Strategic Defence and Security Review through long-term contract awards and commitments.

Chief executive Ian King said: "2016 was a good year for BAE Systems. Our strategy is well defined; we have a large order backlog, long-term programme positions, strong programme execution and a well-balanced portfolio. With an improved outlook for defence budgets in a number of our markets, we are well placed to continue to generate attractive returns for shareholders."