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BAE Systems gets pension boost as trading stays on track

Pension funding and accounting deficits have reduced materially since the end of last year

BAE Systems -
Combat vehicles demand is healthy

BAE Systems PLC (LON:BA.) said sales and profits this year are on track with recent initiatives by the US and US governments on defence spending broadly supportive.

Air, Maritime, Electronic Systems and Intelligence and Security continue to perform strongly said the weapons maker. in a statement adding there was also positive momentum in Platforms & Services (US),

For 2021, BAE had said previously it expects sales to grow at between 3-5% with underlying profits to rise by 6-8 with good defence sales offsetting weakness in civil aircraft.

Charles Woodburn, chief executive, added: "Our good operational performance underlines our confidence in the full-year guidance for top-line growth and margin expansion and our three-year cash targets.

“Strategically, our geographically diverse portfolio is aligned to growing defence budget areas; we're ramping up investment in self-funded R&D aligned to customer focus areas.”

In the US, BAE added that President Biden's budget request for fiscal year 2022 is expected to include top-line defence funding of US$715bn, representing a relatively stable funding level compared to US$704bn in the current fiscal year.

In the UK, the publication of the Defence Command Paper was positive for the group allowing for long-term investment in complex warship, submarine and combat aircraft design alongside well as strong support for cyber.

Elsewhere, BAE added that the combination of the increase in bond yields and higher asset values had led to "material reductions to both our funding and accounting deficits since the end of last year".

BAE's pension scheme had a £4.5bn deficit at the end of 2020 even after a £1bn cash injection by the company.

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