BAE Systems profits soar as global instability boosts defence spending

BAE Systems profits soar as global instability boosts defence spending

BAE Systems, the UK’s largest defence company, has reported a record-breaking year of profits and revenues, driven by increased military spending prompted by Russia’s war on Ukraine and the Israel-Gaza conflict. The FTSE 100 company made underlying profits before interest and tax of £2.7bn on record sales of £25.3bn in 2023. Shares in weapons manufacturers have surged in the past two years after Russia’s full-scale invasion of Ukraine in February 2022 made governments reassess their plans for military spending. There have also been increased tensions across the Middle East since 7 October, when Hamas, which runs Gaza, killed 1,139 people in an assault on Israel1. Israel has responded with months of bombardment of Gaza, killing nearly 30,000 Palestinians. View image in fullscreen Models of aircraft and a helicopter on display at the BAE Systems booth at an exhibition in Australia. Photograph: Bloomberg/Getty Images
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Charles Woodburn, the BAE chief executive, said the weapons manufacturer was expecting “sustained growth” in the coming years. “Instability in Europe, the Middle East and other parts of the world brings into sharp focus the vital role that we play in protecting national security,” he told reporters on Wednesday. “While most of our order volume was driven by existing programme positions that predate the Ukraine conflict, orders to restock and upgrade heavy armour and munitions are starting to come through”.
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Jarek Pominkiewicz, an equity research analyst at Quilter Cheviot, said BAE would benefit from a “growing recognition of the need to bolster defence spending”, particularly in eastern European and Baltic countries close to Russia’s borders. BAE’s share price dropped by more than 3% on Wednesday morning because margins were slightly lower than expected, but remain close to record highs, valuing the company at almost £38bn. Its shares have more than doubled in value since February 2022.
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