REG - BAE SYSTEMS PLC - AGM Trading Statement

BAE SystemsAnnouncement

04/05/2023 07:00

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RNS Number : 3450Y  BAE SYSTEMS PLC  04 May 2023

 
 

 
 
                           4 May 2023

BAE Systems plc - Annual General Meeting and Market Update

BAE Systems plc will hold its Annual General Meeting today at 11.30 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 2022, as detailed in the results announcement published on 23
February 2023.

The results of voting at the Annual General Meeting will be announced later
today.

Additionally, BAE Systems plc provides the following update on trading.

 

Charles Woodburn, BAE Systems Chief Executive, said:

"Trading so far this year has been in line with expectations with continued
good operational performance.

 

"Order flow on new programmes, renewals and progress on our opportunity
pipeline remains strong. In particular, the AUKUS announcement in March is
significant for the company in the medium and long-term and we look forward to
supporting our customers in this far reaching programme.

 

"In the current elevated global threat environment, we're continuing to
deliver on mission critical requirements to our customers, and our global
presence and diverse portfolio of products and services provide a high
visibility for top line growth, margin expansion and cash generation in the
coming years."

 

Guidance

The Group's full year 2023 guidance is unchanged from the Preliminary
announcement on 23 February 2023.

·    Sales
+3 to +5% (2022: £23,256m)

·    Underlying EBIT                 +4 to +6% (2022:
£2,479m)

·    Underlying EPS                   +5 to +7% (2022:
55.5p)

·    2023 Free Cash Flow (FCF)  >£1.2bn

·    Cumulative FCF 2023-2025   £4bn - £5bn

 

·    Guidance is provided on the basis of an exchange rate of $1.24:£1
for the year

·    Sensitivity to EPS is around 1 pence for every 5 cent movement

Operational update

Overall programme execution has been good across all sectors in the year to
date. Notable milestones achieved include:

·    Steel cut on the fourth Type 26 - HMS Birmingham

·    Construction commenced on the third Dreadnought class submarine

·    Two further Typhoons delivered to Qatar

·    Good levels of combat vehicle deliveries

 

Increasing exposure to structurally growing major defence markets

The AUKUS announcement in March is significant for the company. Together with
the Global Combat Air Programme (GCAP) announcement in December with Japan and
Italy, these multi national endeavours further highlight our global reach and
the scale and longevity of our business. As always, we are working closely
with our customers to deliver on their critical long-term programmes which are
reflective of a structural upwards shift in defence spending in our
addressable markets.

 

In the US, the President's 2024 Budget Request increased the defence budget by
over 3% above FY 2023 base levels to $842bn, and we remain well aligned to US
National Defense Strategy  priorities.

In the UK, the Integrated Defence Review refresh provided a further increase
to defence spending, with the uplifts particularly focused on submarine and
munitions, and an expectation to reach 2.25% of GDP by 2025.

In Europe, Finland joined NATO on 4 April and many countries continue to
increase their annual and long-term defence spending plans as they look to
enhance, recapitalise and replenish their capabilities to meet NATO
commitments. We are well placed to continue to benefit through our position on
Eurofighter Typhoon, our shareholding in MBDA, our BAE Systems Hägglunds and
Bofors businesses in Sweden and through US Foreign Military Sales.

Order flow

Given the defence spending environment and order intake so far this year, we
expect orders to once again exceed sales for the full year.

Notable new and strategically important awards received to date include:

·    Tempest - £656m further technology, design and development funding

·    F-35 - $491m in contracts for Block 4 Electronic Warfare systems for
F-35

·    AMPV - $246m undefinitised contract action for purchase of early
order materials in support of a full rate production award expected in the
second half 2023

·    BvS10 - Following the joint procurement agreement among Sweden,
Germany and the UK, Germany is investing c.$400m for 227 additional BvS10
vehicles

·    Naval Guns - $219m contract to equip the Royal Navy's Type 26
frigates with five Mk45 Maritime Indirect Fire Systems

·    Intelligence & Security is one of eight selected by the US Navy
for the Consolidated Afloat Networks and Enterprise Services (CANES)
programme, a ten-year indefinite delivery, indefinite quantity contract with a
total value of $4.1bn.

Evolving the business for long term growth

In support of our growth outlook and to help meet our customer aspirations we
are investing in our people, facilities and technology through a combination
of self and joint funding with our customers, as well as developing
partnerships and collaborations.

Key progress points to date:

·    Strategic agreement with Microsoft aimed at supporting faster and
easier development, deployment and management of digital defence capabilities

·    New shiplift investment commenced at our Jacksonville, Florida ship
repair facility

·    Site investments in the UK to support shipbuild and munitions
capacity

·    Expanding production capacity to support combat vehicle demand across
our facilities in the US and Sweden

·    Collaboration with Heart Aerospace on battery technology for electric
planes

·    Electronic Systems collaboration with Leonardo UK to develop an
interoperable aircraft

survivability suite for rotary and fixed wing fleets

·    Increasing our 2023 UK apprentice and graduate hires by more than 40%
 

 

ESG Update

In 2023, we are progressing our four key pillars of focus: addressing climate
risks; ideas, innovation and technology; creating opportunity for people and
communities and success through partnering.

 

Summary investment points

As laid out in February and further reinforced in the year to date we see
significant potential in the years ahead due to:

·    Strong programme performance underpinned by a robust operating model

·    Continued investment in the business to support future growth

·    Large order backlog providing the foundation for growth over the
medium term

·    Leading technology solutions for our customers

·    Strength of our geographic and capability diversity

·    Our global opportunity pipeline to further enhance growth

·    Scope to drive further margin expansion

·    Our strong balance sheet with good cash generation, supporting value
enhancing capital allocation

Board

As previously announced, Sir Roger Carr will step down as Chairman of the
Board at today's AGM having served his full allowable term. He is succeeded by
Cressida Hogg who has served as a non-executive director of the Company and
chair designate since 1 November 2022.

Capital Allocation

The 2022 final dividend of 16.6 pence per share will be paid, subject to
shareholder approval, on 1 June 2023. Our three-year buyback programme of up
to £1.5bn, which commenced in July 2022, is also making good progress, now
over 60% complete.

 

Investor engagement

In April, we hosted the first of our technology focused webinars, "The Thread"
which focused on our synthetic training capabilities. The replay is available
on the Investors website. Further topics to be covered this year will be on
digital transformation, multi-domain integration and electrification of
transport.

 

Additionally in June, we will host a capital markets event on our Land
capabilities with a focus on our Swedish based Hägglunds business which is
set for high sales growth.

 

2023 Interim results

BAE Systems will announce its interim results for the half year ending 30 June
2023 on 2 August 2023.

 

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 (mailto:investors@baesystems.com)   Email: Kristina.anderson@baesystems.com
                                                                     (mailto:Kristina.anderson@baesystems.com)

 

Cautionary statement:

All statements other than statements of historical fact included in this
document, including, without limitation, those regarding the financial
condition, results, operations and businesses of BAE Systems and its strategy,
plans and objectives and the markets and economies in which it operates, are
forward-looking statements. Such forward-looking statements which reflect
management's assumptions made on the basis of information available to it at
this time, involve known and unknown risks, uncertainties and other important
factors which could cause the actual results, performance or achievements of
BAE Systems or the markets and economies in which BAE Systems operates to be
materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. BAE Systems plc and
its directors accept no liability to third parties in respect of this report
save as would arise under English law. Accordingly, any liability to a person
who has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with Schedule 10A of the Financial
Services and Markets Act 2000. It should be noted that Schedule 10A contains
limits on the liability of the directors of BAE Systems plc so that their
liability is solely to BAE Systems plc.

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announcement are not incorporated into and do not form part of this
announcement

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