- Order intakes of around £10bn since the half-year mark
- All full-year guidance maintained, with sales set to grow by 5-7%
- Acquisition of Ball Aerospace set to be completed in the first half of 2024
Aarin Chiekrie, equity analyst at Hargreaves Lansdown:
“BAE occupies a key space in the defence market, and another promising update proves why the group’s so highly regarded in the defence space. With some of its biggest buyers, the UK, US and Europe, all expected to continue raising defence budgets over the coming years, the sky really is the limit for this jet-maker.
Given the elevated threat environment, demand for BAE’s products and services has remained strong with around £10bn of order intakes since the half-year mark. That takes the year-to-date figure up to around £30bn, and because these are typically long-cycle orders, with payments spread over several years, it gives BAE multi-year revenue visibility. That’s given management the confidence to reiterate all recently upgraded full-year guidance, which is something of a novelty for most businesses in the current uncertain environment.
The regulatory process around BAE’s mammoth $5.55bn acquisition of Ball Aerospace is progressing well and is set to close in the first half of 2024, and it looks like a good fit for BAE. Ball Aerospace provides mission-critical space systems and defence technologies across air, land and sea – complementing BAE’s suite of products nicely. The acquisition should add around $2.2bn in revenue to BAE’s top line, before growing at a compound rate of around 10% annually over the next 5 years. And given the similarities between the two businesses, there’s clear scope to streamline operations, cut costs and boost profit margins.”
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