Defence firm BAE Systems (BAES) has seen its share price gain after reporting strong annual earnings growth for 2019.
The British company announced results at the higher end of analyst forecasts, with earnings per share of 45.8 pence for the year, a growth of 7 per cent. Pre-tax profit gained by almost a third to £1.6bn ($2bn, €1.9bn).
By noon, BAE Systems’ share price stood at 654.80 pence, up 2.31 per cent.
With continuing demand for its combat vehicles, Typhoon and F-35 fighter jets and its Astute Class nuclear-powered submarines, BAE Systems welcomed the year’s marginally lower tax rate and focussed on improving operational efficiency.
Charles Woodburn, the company’s chief executive, stated: “We delivered a good set of financial results in line with guidance, growing sales and earnings, with improved operational performance and increased investment in the business to underpin our growth outlook.”
The firm said its earnings per share would grow by a mid-single digit percentage next year. This figure will not include the effect of the acquisitions BAE announced in January.
Set to be the largest it has undertaken in more than 10 years, BAE plans to acquire $2.2bn-worth of American satellite navigation and radio businesses by the end of this year.
The pressure that US president Donald Trump has applied on European nations to increase defence spending looks set to aid BAE’s bottom line in 2020, with Woodburn saying: “A number of European countries are looking to increase their defence spending and move closer to meeting their NATO commitments. The group is well-positioned to benefit."
The CEO also identified the Middle East as an area for growth, observing: “there are a number of other customers in addition to Saudi, who I think in future will be looking at additional Typhoons".
2019’s growth has enabled BAE Systems to fix its pension crisis. At the latest valuation the firm’s pension fund had a £1.9bn deficit. Following the annual earnings report the company announced a £1bn payment to its pension fund, funded by new debt.