BAE Systems PLC (LSE:BA.) upgraded its full-year guidance following a solid financial and operational performance in the first half of the year.
Sales for the defence contractor came in at £14.6 billion for the six months to 30 June, an increase of 11% compared to a year ago.
Underlying profit (EBIT) grew 13% to £1.55 billion, while reported operating profit inched up 2% to £1.3 billion to reflect amortisation from the significant acquisitions the previous year, including Ball Aerospace.
Full-year sales are now expected to grow by 8-10%, up from 7-9%, while underlying EBIT is forecast to increase 9-11%, up from 8-10%.
However, guidance for underlying earnings per share remained unchanged at 8-10%, as the strong share price increase since the start of the year is expected to result in fewer shares being repurchased.
The free cash flow target was maintained for at least £1.1 billion.
Overall, it was a "strong operational and financial performance in the first half of the year, giving us the confidence to upgrade our guidance,” said chief executive Charles Woodburn.
The FTSE 100 company's order intake was £13.2 billion, lower than the £15.1 billion a year ago, and it closed the period with an order book of £57 billion, down £3.4 billion since December, with a total order backlog of £75.4 billion, down £2.4 billion.
Cash flow of £74 million was reported, with a free cash outflow of £368 million, reflecting movements on customer advances, which BAE said was in line with expectations.
The balance sheet had cash of £2.15 billion amidst total net debt (excluding lease liabilities) of £5.6 billion.
BAE increased its interim dividend by 9% to 13.5p, having returned £849 million to shareholders through dividends and share buybacks in the first half.