TIDMBA.
RNS Number : 3757K
BAE SYSTEMS PLC
05 May 2022
5 May 2022
BAE Systems plc - Annual General Meeting and Market Update
BAE Systems plc will hold its Annual General Meeting today at
11.00 a.m. in Farnborough, Hampshire, UK. At the meeting, Chairman,
Sir Roger Carr, and Chief Executive, Charles Woodburn, will comment
on the performance of the Group in 2021, as detailed in the results
announcement published on 24 February 2022.
The results of voting at the Annual General Meeting will be
announced later today.
Additionally, BAE Systems plc provides the following update on
trading year to date.
Charles Woodburn, BAE Systems Chief Executive , said:
"Trading in the first quarter has been in line with expectations
with strong order intake and good operational performance being
maintained.
"Looking forward, our diverse portfolio, together with our focus
on programme execution, cash generation and efficiencies, are
helping us to navigate the challenging operating environment in the
near term, while positioning us well for sustained top line and
margin growth in the coming years, alongside accelerating our ESG
agenda. Additionally, we see opportunities to further enhance the
medium- term outlook as our customers address the elevated threat
environment."
Guidance
The Group's full year 2022 guidance across all metrics is
unchanged from that provided at the Preliminary announcement on 24
February 2022.
-- Sales +2-4% (2021: GBP21,310m)
-- Underlying EBIT +4-6% (2021: GBP2,205m)
-- Underlying EPS +4-6% (2021: 47.8p)
-- 2022 Free Cash Flow (FCF) >GBP1bn
-- Cumulative FCF 2022-2024 >GBP4bn
-- Guidance is provided on the basis of an exchange rate of $1.38:GBP1 for the year
Should the current dollar rate persist, this will be a tailwind
to earnings with sensitivity to EPS being around 1 pence for every
5 cent movement.
Operational update
Overall programme execution has been good across all sectors in
the year to date. There remain ongoing pressures on our supply
chains, delivery lead times and people resourcing across our
operations. Consistent with our guidance we continue to mitigate
the major financial impacts. In many cases, we benefit from
long-term programme positions and incumbencies with more stable
forward visibility for long-lead items allowing us to continue to
actively manage supplier lead times against demand
requirements.
Order flow
We continue to expect a strong year of order intake and order
flow to date has been positive especially on our long-term
programmes.
Orders received are predominantly long cycle in nature which
will support our growth expectations into the coming years.
Additionally, there is a pipeline of opportunities across all
sectors to enhance the growth outlook, as we look to support our
key customers and allies in addressing the heightened threat
environment.
Notable new and strategically important awards received this
year include:
Sector Contract
Electronic F-35 Lightning II EW systems
Systems
---------------------------------------------------------
Electronic M-Code Global Positioning System modules
Systems
---------------------------------------------------------
Electronic Airborne High Frequency Radio Modernisation programme
Systems
---------------------------------------------------------
Electronic Electric drive systems for new zero-emission capable
Systems hybrid transit buses in Philadelphia
---------------------------------------------------------
Platform & Amphibious Combat Vehicle programme Lot 2 full rate
Services production
---------------------------------------------------------
Platform & USS Essex and USS Mustin ship repair and maintenance
Services
---------------------------------------------------------
Platform & 7-year support, sustainment & readiness for Norwegian
Services CV90s
---------------------------------------------------------
Air 11-year contract for support to the UK's Royal Air Force
Hawk fleet
---------------------------------------------------------
Air MBDA order flow from Rafale exports
---------------------------------------------------------
Cyber and Intel US Navy Naval Air Warfare Center Webster Outlying Field
support
---------------------------------------------------------
Cyber and Intel Lifecycle management and sustainment of the US Navy's
C5ISR systems
---------------------------------------------------------
Defence spending outlook in our key markets
Our geographic diversity positions us strongly as many of the
countries in which we operate have announced or are making plans to
increase spending to counter the elevated and evolving threat
environment on multiple fronts.
In the US, the spending outlook is positive. The Fiscal Year
2022 Omnibus Appropriations bill was signed into law on 9 March.
This FY22 budget of $743bn maintains funding support for many of
our key programmes: combat vehicles; F-35 and other electronic
warfare programmes; and precision weapon systems. The President's
Fiscal Year 2023 Budget Request includes $773bn for the Department
of Defense and the business remains well aligned to the current US
National Defense Strategy readiness and modernisation priorities of
the US military services. We expect continued alignment with the
2022 National Defense Strategy release.
In the UK, the Defence Command Paper renewed commitments to our
major long-term programmes in complex warship, submarine and combat
aircraft design and build, allowing for long-term investment in
these key sovereign capabilities, as well as strong support for the
cyber domain. The opportunity pipeline is positive with domestic,
export and collaboration opportunities identified and we have the
capabilities to support our UK customer in its space ambitions.
In Europe, the significant step up in German defence expenditure
is important for long-term defence funding. We see other nations
increasing or likely to increase their defence budgets to address
the threat environment and for NATO countries to move to, and even
beyond, their 2% of GDP commitments. We remain well placed through
our positions on Eurofighter Typhoon, our shareholding in MBDA, our
BAE Systems Hägglunds and Bofors businesses based in Sweden,
through US Foreign Military Sales and we are pursuing a number of
significant opportunities in the region.
Our portfolio is well positioned to benefit from increased
defence spending in Asia Pacific through our Australia business,
which is already set to grow significantly due to our contracted
positions and through export opportunities from our UK, US and
Australian business to the region. The AUKUS announcement is
strategically significant, and a clear example of how nations are
looking to co-ordinate capabilities in multi domain operations to
address the threat environment. As the largest defence provider in
the UK and Australia and a top 10 prime contractor to the US DoD,
we are well positioned to support our government customers in these
nations as discussions progress.
In the Middle East, our longstanding relationships at government
and company levels, continued regional instability and the nature
of our long-term contracts, mean we expect defence and security to
remain a priority. The renewal of certain existing long-term
support contracts is tracking in line with expectations and we
continue to progress a number of opportunities with existing
customers.
Portfolio and sector re-alignment
As disclosed in the Annual Report and reflecting the changes in
operational reporting lines effective from the beginning of the
year, the BAE Systems Australia business will transition from being
reported in the Air segment to the Maritime segment. Additionally,
the Group has established a new Digital Intelligence business,
bringing together the non-US digital and data capabilities to
further strengthen how we deliver these services and capabilities
to our customers. Digital Intelligence will report within the Cyber
& Intelligence segment.
The re-presented 2021 sales performance to reflect these changes
is detailed below. There is no change to the guidance ranges
following this segmental representation.
Year ended 31 December As reported Reclassification Re-presented
2021 GBPm GBPm GBPm
Electronic Systems 4,491 - 4,491
------------ ----------------- -------------
Platforms & Services 3,395 - 3,395
------------ ----------------- -------------
Air 8,321 (872) 7,449
------------ ----------------- -------------
Maritime 3,416 753 4,169
------------ ----------------- -------------
Cyber & Intelligence 1,752 171 1,923
------------ ----------------- -------------
HQ/intra-group (65) (52) (117)
------------ ----------------- -------------
Group Sales 21,310 - 21,310
------------ ----------------- -------------
In March, we completed the acquisition of Bohemia Interactive
Simulations (BISim), a leading developer of advanced military
simulation and training software. BISim expands our modelling and
simulation capabilities to meet growing global demand for agile
military training that helps to protect military personnel and
reduce the environmental impacts of live training, while supporting
the carbon net zero ambitions of our customers and ourselves.
ESG
It is important to recognise the defence industry's contribution
to security and prosperity and that BAE Systems is a responsible,
government-backed, strictly regulated and ethically-led defence and
security company.
Global events have more than ever demonstrated the need for
strong defence and security in the face of aggression by nation
states. The defence industry and we at BAE Systems provide critical
capabilities and support to our governments and their allies to
fulfill their primary obligations to keep their citizens safe, as
well as providing important positive economic and societal
contributions from the provision of sustainable high-quality and
well-paid jobs.
Additionally, we continue to advance our capabilities in
sustainable technologies with a number of electric-hybrid contracts
won in the period. We are harnessing our expertise in energy
management systems and flight controls to support the development
of electric propulsion systems for future flight, with GE Aviation
selecting us to provide energy management solutions for NASA's
hybrid electric technology demonstrator programme.
The progress we are making on our sustainability agenda has been
reflected in an improvement in ratings from a number of providers,
and we have maintained our AA leader class rating with MSCI.
Board
As previously announced, Dame Carolyn Fairbairn and Ian Tyler
will be standing down from their roles as Non-Executive Directors
at today's Annual General Meeting (AGM). Nicole Piasecki will
succeed Ian Tyler as Chair of the Remuneration Committee with
effect from the close of the AGM.
Final dividend
The 2021 final dividend of 15.2 pence per share will be paid,
subject to shareholder approval, on 1 June 2022.
Investor engagement
We will host a capital markets event in October with a focus on
the Digital Intelligence business, technology advancements and an
update on our ESG agenda.
2022 Interim results
BAE Systems will announce its interim results for the half year
ending 30 June 2022 on 28 July 2022.
For further information please contact:
Investors Media
Martin Cooper, Kristina Anderson,
Investor Relations Director Director, Media Relations
Telephone: +44 (0)1252 383455 Telephone: +44 (0) 7540 628673
Email: investors@baesystems.com Email: Kristina.anderson@baesystems.com
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END
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