- Rishi Sunak said the UK would hike defence spending to 2.5% of GDP by 2030
- The United States recently approved $61bn (£49n) of assistance to Ukraine
BAE Systems expects ‘further positive momentum’ driven by the recent US military aid package for Ukraine and the UK Government’s commitment to raise defence spending.
Prime Minister Rishi Sunak said last month the UK would hike defence expenditure to 2.5 per cent of GDP by 2030, thereby helping the country combat an ‘axis of authoritarian states,’ such as Russia, Iran, and China.
At the same time, the US approved $61billion (£49billion) of assistance to Ukraine, including missiles and ammunition, as part of a larger deal that also gave weapons to Israel and Taiwan.
Flying away: BAE Systems, which manufactures the Eurofighter Typhoon jets (pictured), has received a significant bump in orders from countries raising defence spending
Global defence spending has ramped up in the past few years, reaching an all-time high of $2.44trillion in 2023, amid escalating tensions in Asia, the Middle East, and Eastern Europe.
Consequently, companies like BAE Systems, which manufactures the Eurofighter Typhoon jets, have received a significant bump in orders.
In March, the Australian Government chose the FTSE 100 firm and naval shipbuilder ASC Pty to build and operate nuclear-powered submarines under the AUKUS agreement.
BAE also recently won deals worth $754million to produce armoured multi-purpose vehicles for the US Army, over $690million to upgrade the Danish CV90 infantry vehicle fleet, and up to $182million from the US National Geospatial-Intelligence Agency.
To meet this output, the group plans to hire a record 2,700 apprentices, graduates and undergraduates in the UK this year.
Charles Woodburn, chief executive of BAE Systems, said: ‘We’re continuing to deliver on mission-critical requirements for our customers, and progress our long-term strategic programmes within the elevated threat environment.
‘Our global presence and diverse portfolio of products and services provide high visibility for top-line growth, margin expansion and cash generation in the coming years.’
For the full year, BAE expects revenues will increase by 10 to 12 per cent on the £25.3billion made in 2023, while underlying earnings will grow by 11 to 13 per cent.
The company also announced that its Space & Mission Systems business, formerly Ball Aerospace, had a ‘good start’ to 2024 after multiple contract wins.
BAE completed the £4.4billion acquisition of Ball Corporation’s aerospace division in February, giving it a greater presence across the civil space, missiles and munitions sectors.
BAE Systems shares were 0.6 per cent higher at £13.90 on Thursday morning and have climbed by around 172 per cent over the last three years.