BAE Systems says performance remains on target

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BAE Systems PLC (LON:BA.) has held its sales and cashflow guidance steady for the current year and said order intake expectations are now ahead of pre-coronavirus pandemic planning for the year.

The defence contractor said underlying earnings per share are now expected to be slightly higher than previously guided, thanks to an expected lower tax rate offsetting negative currency swings.

As part of the Eurofighter Typhoon consortium, the FTSE 100 group hailed Germany’s decision last week to order 38 of the aircraft and said it was working with its industrial partners to conclude the contracts.

“Our large order backlog and incumbent programme positions are expected to lead to strong and profitable top line growth with increasing cash conversion in the coming years,” the company said in a trading update.

On that note, BAE pointed to the UK’s recent commitment to spending at least 2.0% of gross domestic product on defence, although there is still political uncertainty in the US.

Other regions were said to offer potential in coming years, with the company citing increased defence budgets in Australia and a number of European nations, as well as its ongoing relationship with Saudi Arabia.

Chief executive Charles Woodburn called it “a resilient performance in line with our expectations for a strong second half”, adding that actions taken in the second quarter, including the Raytheon acquisitions, “are working well as reflected in our guidance”.

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