BAE Systems' profits exceeded £3billion last year as countries around the world continued to ramp up military spending amid elevated geopolitical tensions. Europe's largest defence contractor revealed its underlying earnings before tax and interest increased by 14 per cent at constant currency levels in 2024. The FTSE 100 group's revenue jumped by more than £3billion to £28.3billion on the back of growth across all divisions.
Its electronic systems division saw organic sales rise by 9 per cent thanks to bumper trade at its commercial aviation and precision strike and sensing businesses. However, the segment's total turnover climbed by 35 per cent to £7.2billion due to the acquisition of Ball Aerospace, which has significantly expanded BAE's presence in the United States. BAE's platform and services arm also performed strongly, with revenue growing by 15 per cent to £4.4billion following healthy demand for the CV90 and Bradley combat vehicles, as well as the Archer artillery system.
Results: BAE Systems' profits soared to £3billion last year as countries continued to ramp up military spending amid elevated geopolitical tensions. The FTSE 100 company won a £2billion contract in December to build 165 new CV90 vehicles for Sweden and Denmark. Other orders won by the firm included a £4.6billion maritime contract to deliver the first of three Hunter-class frigates for the Royal Australian Navy and a $460million deal to provide radios for the US Army.
While BAE's order intake shrank by £4billion to £33.7billion, the contracts it gained helped its order backlog surge to a record £77.8billion. Charles Woodburn, chief executive of BAE, 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.'. Global defence expenditure accelerated by 7.4 per cent to a record $2.46billion last year, according to the International Institute for Strategic Studies.
Spending has surged following Russia's full-scale invasion of Ukraine, rising threats in the Middle East and worsening tensions between Western countries and China. European countries have also upped their military budgets in response to pressure from President Donald Trump, who has long accused them of relying too much on the United States. In a speech at the Munich Security Conference this week, Trump's vice president, JD Vance, called on Europe to 'step up in a big way to provide for its own defence'.
Mark Crouch, market analyst at eToro, said: 'With the UK and other European nations now in the precarious position of needing to rapidly resupply their military forces, defence contractors like BAE...will play a key role in filling that gap. 'And in countries like the UK, where armed forces are now roughly 20 per cent smaller than they were a decade ago, this gap presents a significant opportunity for defence giants like BAE to step in.'.
