A global defence, aerospace and security company. BAE Systems delivers a range of products and services for air, land and naval forces, as well as advanced electronics, security, information technology solutions and support services. I have a holding in my income portfolio (epic code: BA.)
BAE Systems announced their interims today. Sales had increased by 1.5% to £7,952m with operating profit at £750m down by 2.3% and diluted EPS at 12.5p also down 2.3%.
Improvements continue to be made to the order book, where at £43.1bn it was up from £42.4bn at 31st December 2012 and above the £40.0bn at this time last year. The division with the largest improvement from the year-end was Platform & Services (International), due to awards for the five-year Typhoon follow-on support contract and further weapons package in Saudi Arabia, together with renewal of the Australian Hawk support programme.
Free cash flow was negative at just under £1bn compared to £597m generated last year. Not surprisingly a net cash position of £0.4bn at the year-end has moved to a net debt position of £1.2bn, leaving the company geared at 29.4%.
The company expects double digit growth in underlying EPS for the year, which includes the benefit from the share repurchase programme, the affects from reductions to US defence budgets and the satisfactory conclusion to Salam pricing negotiations this year. They previously stated that they expected modest growth for the year, but that this excluded Salam (worth 3p per share), the affect of the share buy-back programme and any impact from US sequestration. So we have 42.8p, up marginally from ~42p (both including Salem).
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