UK defence group BAE Systems lifts profit forecast as military spending soars

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BAE Systems has lifted its annual profit forecast as the war in Ukraine helped drive orders to a new record at Britain’s biggest defence company.

The company said on Wednesday that it had won £21.1bn of new orders in the first six months of the year, as governments stepped up their military spending. Its order backlog hit a record £66.2bn.

The FTSE 100 group, which builds everything from Eurofighter Typhoon jets to nuclear submarines and combat vehicles as well as making ammunition for the British military, forecast that its earnings per share would grow between 10 per cent and 12 per cent this year, double a previous prediction.

Shares in BAE have surged 70 per cent since the start of last year, making the company the second-best performer in the FTSE 100 after energy supplier Centrica.

Sales in the first half of the year climbed 11 per cent to £12bn, BAE said, while its underlying earnings before interest and tax were up 10 per cent to £1.3bn. The group’s free cash flow increased almost tenfold to £1.1bn.

For the full year, BAE said it now expected to generate more than £1.8bn in free cash flow, some £600mn higher than previously forecast. 

Alongside its first-half results, BAE also announced another three-year share buyback programme worth £1.5bn.