BAE Systems PLC (LON:BA) has reported an increase in sales and earnings for full-year 2017 but said it expects its 2018 underlying earnings to be flat sending its shares lower
The FTSE 100-listed defence and aerospace company saw its 2017 group sales increase to £19.63bn, up from £19.02bn in 2016, helping underlying earnings (EBITA) grow to £2.034bn from £1.905bn the previous year.
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The company said the increase in annual earnings was helped by an increase in production of the F-35 combat aircraft, with the programme receiving orders worth over £333mln.
It also highlighted growing demand for its Advanced Precision Kill Weapon System (APKWS™) laser-guided rockets also helped drive an increase in earnings, with awards totalling nearly £222mln over the period.
The company also said it had seen a reduction in net debt to £752mln from £1,542mln in 2016, and raised its dividend per share by 2% to 21.8p.
Looking to 2018, BAE said it expected earnings to be flat, reflecting organisational changes plus the adoption of a new accounting standard. That guidance was below analyst forecasts, which predicted earnings to grow by 2% in 2018.
In early morning trading, BAE shares were down 2.7% at 585.2p.
Analyst comment
In a note to investors, Beaufort Securities reiterated its “Buy” rating for BAE, citing a solid order backlog and an encouraging global economic trend with higher oil prices as indicators for positive momentum going forward.
The broker added that an “improving outlook” for defence budgets in a number of BAE’s markets was also a “good upside”.
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