BAE Systems plc (LON:BA) has announced its preliminary results announcement 2024.
Charles Woodburn, BAE Systems Chief Executive, said: “The results we’re reporting today reflect the outstanding efforts of our employees and continue our track record of strong top-line and earnings growth, free cash flow and orders.
“We’re supporting our customers around the world, while shaping our portfolio towards higher growth and strategically important markets. Across our business, we’re also investing in our people, facilities and technologies to drive efficiencies, boost capacity and increase our agility to deliver in a rapidly evolving environment.
“Based on the exceptional visibility of our record order backlog and sustainability of our value-compounding business model, we remain confident in the positive momentum of our business into the future.”
Financial highlights
Financial performance measures as defined by Group1 | Year ended 31 December2024 | Year ended 31 December2023 | Variance2 |
| Sales | £28,335m | £25,284m | 14% |
| Underlying earnings before interest and tax (EBIT) | £3,015m | £2,682m | 14% |
| Underlying Earnings Per Share (EPS) | 68.5p | 63.2p | 10% |
| Free cash flow | £2,505m | £2,593m | £(88)m |
| Order intake | £33.7bn | £37.7bn | £(4.0)bn |
| Order backlog | £77.8bn | £69.8bn | £8.0bn |
| Financial performance measures as derived from IFRS | Year ended 31 December2024 | Year ended 31 December2023 | Variance2 |
| Revenue | £26,312m | £23,078m | 14% |
| Operating profit | £2,685m | £2,573m | 4% |
| EPS – basic | 64.9p | 61.3p | 6% |
| Net cash flow from operating activities | £3,925m | £3,760m | £165m |
| Order book | £60.4bn | £58.0bn | £2.4bn |
| Dividend per share | 33.0p | 30.0p | 10% |
As defined by Group
· The 14%2 growth in sales and underlying EBIT reflects strong programme performance across all sectors and the benefit of M&A activities in the year, including the acquisition of Ball Aerospace (now Space & Mission Systems (SMS)) in February.
· Growth of 10%2 in underlying EPS reflects the increase in underlying EBIT, partially offset by the increase in underlying net finance costs incurred as a result of the $4.8bn (£3.8bn) debt finance raised in the year.
· Free cash flow was £2,505m, reflecting a high level of customer advances towards the end of the year and strong operational cash conversion. This was offset by higher capital expenditure and net finance costs.
· Our order backlog grew by 11% to a record £77.8bn, which included order backlog of £3.0bn related to SMS.
As derived from IFRS
· The growth in revenue of 14% reflects the same strong programme performance across the portfolio.
· Operating profit was up 4% as the growth in underlying EBIT was offset by the additional amortisation of intangible assets acquired with SMS.
· Basic EPS was up 6%, also reflective of the additional finance costs and amortisation of intangibles incurred as a result of M&A activities in the year.
· The increase in net cash flow from operating activities was driven by strong operational cash conversion.
Capital deployment
· The Board has recommended a final dividend of 20.6p, taking the total dividend for 2024 to 33.0p – an increase of 10% on last year. Subject to shareholder approval at the 2025 Annual General Meeting, the dividend will be paid
on 2 June 2025 to shareholders on the share register on 22 April 2025.
· During the year, the Company repurchased 43m of shares under our share buyback programmes, at a cost of £555m. Combined with dividends, the Group returned £1,492m to shareholders in the year ended 31 December 2024.
· In March, we successfully raised $4.8bn (£3.8bn) of debt finance following the $5.5bn (£4.4bn) acquisition of Ball Aerospace.
Delivering for our customers
Our continued focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers worldwide. During the year, we secured £33.7bn of orders and made good progress executing on our long-term major programmes. Highlights included:
· we reached agreement with our international partners, Leonardo SpA and Japan Aircraft Industrial Enhancement Co Ltd (JAIEC), to form a new joint venture company, which will be accountable for the design, development and delivery of a next generation combat aircraft under the Global Combat Air Programme (GCAP), subject to regulatory approvals;
· under the AUKUS announcement, we were selected to deliver Australia’s new fleet of nuclear-powered submarines, alongside ASC Pty Ltd (ASC). In November, we also entered into an initial mobilisation arrangement with the Australian Government to progress its SSN-AUKUS programme together with ASC;
· we signed a contract, worth £4.6bn, for the delivery of the first three Hunter Class frigates in Australia, following which, we entered the construction phase and officially cut steel on the first ship at a ceremony at the Osborne Naval Shipyard in Adelaide, South Australia;
· continued strong demand for our combat vehicles and, building on an initial contract in May, our Hägglunds business received further orders in December, bringing the total value to approximately $2.5bn (£2.0bn); and
· multiple satellite launches with our systems on board for the US Space Force and NASA. We also completed testing and delivery of the primary scientific instrument for the Nancy Grace Roman Space Telescope to NASA’s Goddard Space Flight Center.
Investing in tomorrow
Alongside good operational delivery, we continue to invest in our people, research and development (R&D) and capital expenditure. Highlights included:
· we recruited around 2,300 new apprentices and graduates in the UK and, in the US our intern programme provided placement opportunities for nearly 500 interns;
· we opened our new state-of-the-art shipbuilding academy in Glasgow, UK, greatly enhancing our ability to develop and train our Naval Ships workforce and expanding on our established academies in Barrow-in-Furness and Samlesbury, UK;
· we made significant progress on the construction of our new ship build assembly hall in Glasgow, which we expect to be fully operational in 2025;
· we are investing more than £160m in our Hägglunds business, based in Sweden, in advanced manufacturing capabilities and a new customer test and acceptance centre to expand our production and delivery capabilities; and
· we have committed to investing £220m in an advanced technology factory in Rochester, UK, to support our UK-based Electronic Systems business, which is expected to deliver increased capacity through a more efficient and sustainable facility.
Shaping the portfolio
We continued to enhance our world class portfolio to strengthen our relevance in a rapidly evolving global threat environment. Highlights included:
· making excellent progress on integration activities within our new SMS business, with the bulk of our core systems and processes now transitioned;
· reducing our shareholding in Air Astana from 49% to 17%, following its Initial Public Offering (IPO) in February – with cash proceeds on disposal of £166m and a profit on disposal of £75m; and
· completing several smaller acquisitions in the UK during the year to strengthen our drone and counter-drone capabilities.
Group guidance3 for 2025
Guidance is provided on the basis of an exchange rate of $1.28:£1, which is in line with the actual 2024 exchange rate.
| Year ended 31 December 2025 | Guidance | Year ended 31 December 2024 Results |
| Sales | Increase by 7% to 9% | £28,335m |
| Underlying EBIT | Increase by 8% to 10% | £3,015m |
| Underlying EPS | Increase by 8% to 10% | 68.5p |
| Free cash flow target | >£1.1bn | £2,505m |
| Three-year cumulative free cash flow guidance | Guidance | |
| Cumulative free cash flow 2023-2025(previously in excess of £5.0bn) | In excess of £6.0bn | |
| Cumulative free cash flow 2024-2026(previously in excess of £5.0bn) | In excess of £5.5bn | |
| Cumulative free cash flow 2025-2027 | In excess of £5.5bn |
· Underlying net finance costs c.£400m
· Effective tax rate c.20%
· Non-controlling interests c.£90m
Sensitivity to foreign exchange rates: BAE Systems operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£525m, Underlying EBIT by c.£75m and Underlying EPS by c.1.4p.
1. We monitor the underlying financial performance of the Group using alternative performance measures (APMs). These measures are not defined in International Financial Reporting Standards (IFRS) and therefore are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. The relevant IFRS measures are presented where appropriate. The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 46.
2. Growth rates for sales, underlying EBIT and underlying EPS are on a constant currency basis (i.e. calculated by translating the results from entities in functional currencies other than pounds sterling for the year ended 31 December 2023 to pounds sterling at the average exchange rate of such currencies for the year ended 31 December 2024). The comparatives have not been restated. All other growth rates and year-on-year movements are on a reported currency basis.
3. While the Group is subject to geopolitical and other uncertainties, the Group guidance is provided on current expected operational performance. The guidance is based on the measures used to monitor the underlying financial performance of the Group.
