Results centre

Results centre

2016 Half Year Results

  Six months ended
30 June 2016
Six months ended
30 June 2015
Year ended
31 December 2015
Sales1 £8,714m £8,472m £17,904m
Revenue £8,278m £8,001m £16,787m
Underlying EBITA2 £849m £800m £1,683m
Operating profit £776m £700m £1,502m
Underlying earnings3 per share 17.4p 17.1p 40.2p
Basic earnings per share4 12.9p 12.3p 29.0p
Order backlog1,5 £36.3bn £37.3bn £36.8bn
Dividend per share 8.6p6 8.4p 20.9p
Operating business cash flow7 £(20)m £(349)m £681m
Net debt (as defined by the Group)8 £(2,036)m £(1,939)m £(1,422)m

1. Including share of equity accounted investments.
2. Earnings before amortisation and impairment of intangible assets, finance costs and taxation expense (EBITA) excluding non-recurring items.
3. Earnings excluding amortisation and impairment of intangible assets, non-cash finance movements on pensions and financial derivatives, and non-recurring items.
4. Basic earnings per share in accordance with International Accounting Standard (IAS) 33, Earnings per Share.
5. Comprises funded and unfunded unexecuted customer orders, and is stated after the elimination of intra-group orders.
6. Interim dividend declared.
7. Net cash (outflow)/inflow from operating activities after capital expenditure (net), financial investment and dividends from equity accounted investments.
8. Comprises cash and cash equivalents, less loans and overdrafts (including debt-related derivative financial instruments) and cash received on customers’ account.

Financial

  • Sales1 increased by £0.2bn to £8.7bn mainly due to exchange translation
  • Underlying EBITA2 increased by 6% to £849m, or 3% on a constant currency basis
  • Underlying earnings3 per share increased by 2% to 17.4p
  • Large order backlog1,5 of £36.3bn
  • Interim dividend increased by 2% to 8.6p per share
  • Net debt8 of £2.0bn on utilisation of customer advances
  • Group’s share of the pre-tax accounting net pension deficit9 increased by £1.6bn to £6.1bn

Key business highlights

  • In April, Eurofighter partner, Leonardo, signed a contract to supply 28 Typhoon aircraft to Kuwait, which is expected to result in airframe manufacture, capability upgrade and Electronically Scanned (E-Scan) radar integration work valued at approximately £1bn for BAE Systems
  • In July, BAE Systems welcomed a ten-year partnership arrangement with the UK Ministry of Defence, expected to be worth £2.1bn, to support the UK Typhoon fleet
  • Three contracts announced with a total value of approximately £300m to support the UK Ministry of Defence’s fleet of Hawk fast jet trainer aircraft until 2020
  • Awarded a £118m contract to build engineering and training facilities in the UK for F-35 Lightning II aircraft
  • UK and French governments announced a new €2bn (£1.7bn) project to build an unmanned combat air system demonstrator
  • £472m UK Ministry of Defence contract extension to the Type 26 frigate demonstration phase
  • $245m (£183m) contract to provide three gun systems and a trainer for the Royal Navy’s Type 26 frigate
  • $149m (£111m) contract for the production of new Assault Amphibious Vehicles for the Japanese Ministry of Defence
  • $182m (£136m) contract to refurbish 262 Swedish Army CV90 combat vehicles
  • The MBDA joint venture, in which BAE Systems has a 37.5% interest, continued to win new orders, BAE Systems' share of which was £462m in the first half of 2016
  • 1. Including share of equity accounted investments.
    2. Earnings before amortisation and impairment of intangible assets, finance costs and taxation expense (EBITA) excluding non-recurring items.
    3. Earnings excluding amortisation and impairment of intangible assets, non-cash finance movements on pensions and financial derivatives, and non-recurring items.
    5. Comprises funded and unfunded unexecuted customer orders, and is stated after the elimination of intra-group orders.
    8. Comprises cash and cash equivalents, less loans and overdrafts (including debt-related derivative financial instruments) and cash received on customers’ account.
    9. Net IAS 19 deficit excluding amounts allocated to equity accounted investments and other participating employers.

Guidance for 2016

Group

With some anticipated trading bias to the second half of the year, the Group continues to expect underlying earnings2 per share for 2016 to be approximately 5% to 10% higher than the adjusted underlying earnings2 per share of 36.6p* in 2015.

* Reported underlying earnings2 per share of 40.2p excluding tax provision releases of 4.3p per share and adjusting for a 0.7p per share benefit to an assumed US$1.45 to sterling translation rate. A ten cent movement in the US$/£ exchange rate translates to approximately 0.8p in underlying earnings2 per share.

Segmental

Electronic Systems:

  • Low single-digit sales1 growth is expected in 2016 with margins around the middle of an increased 13% to 15% range.

Cyber & Intelligence comprising the US Intelligence & Security sector and UK-headquartered Applied Intelligence business:

  • Low single-digit sales1 growth is expected in 2016 with stable sales in Intelligence & Security and good double-digit growth in Applied Intelligence.
  • Margins are expected to improve to within a 7% to 9% range principally as anticipated second half sales growth in Applied Intelligence outpaces the continued high investment in product development and marketing costs.

Platforms & Services (US):

  • Sales1 are expected to be some 10% lower, including a reduction in naval ship repair activity as the pivot of the fleet to the West Coast continues.
  • Margins are expected to increase, to a range of 7% to 8%, including charges taken in commercial shipbuilding in the first half.

Platforms & Services (UK):

  • Sales1 are expected to be slightly lower in line with planned lower Typhoon deliveries. Increased submarine programme activity is expected to offset reducing aircraft carrier sales.
  • Margins are expected to be at the lower end of a 10% to 12% range.

Platforms & Services (International):

  • Sales1 are expected to grow around 5% in 2016 with increased Typhoon aircraft support.
  • Margins are expected to be at the lower end of a 10% to 12% range.

HQ costs are expected to be similar to those in 2015. Underlying finance costs are expected to increase by £35m in 2016. The effective tax rate remains dependent on the geographical mix of profits, but is expected to increase slightly to around 22%.

1. Including share of equity accounted investments.
2. Earnings excluding amortisation and impairment of intangible assets, non-cash finance movements on pensions and financial derivatives, and non-recurring items.

Date Title HTML PDF Webcast Presentation
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