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BAE Systems Shares Rise On Strong Order Intake – FX Tailwind

Sam Boughedda
Sam Boughedda trader
Updated 15 Nov 2022

BAE Systems (LON: BA.) released a trading update on Tuesday, sending its shares over 3% higher at the open.

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The arms, security, and aerospace company told investors that trading during the period has been positive, with a strong order intake and good operational performance despite “challenging conditions.”

As a result of its strong order flow, the company has secured a further £10 billion in the second half to date.

“Order flow remains strong and our focus on programme execution, cash generation and efficiencies is helping us to navigate the challenging operating environment,” commented Charles Woodburn, BAE Systems Chief Executive Officer. 

“Looking forward, our large order backlog, diverse portfolio position and focus on programme performance position us well for another year of top line growth and margin expansion in 2023. We see sales growth coming from all sectors and opportunities to further enhance the medium-term outlook as our customers address the elevated threat environment.” 

BAE told investors that it is continuing to work through the ongoing supply chain challenges, especially in areas reliant on microelectronics. However, it stated that the recruitment picture has been improving since the half year, mainly in Electronic Systems. 

Despite the current headwinds, BAE explained that it continues to drive top-line growth and margin expansion and does not see a material impact from higher energy prices as the company is well hedged in the UK, while its other major markets are relatively energy independent.

Looking ahead, while the company confirmed its full-year 2022 guidance is unchanged on a constant currency basis, the US dollar’s strength has resulted in a tailwind to reported earnings.

As a result, sales with an average FX rate of $1.23:£1 are expected to be up 7% to 9% for the full year, compared to the previous $1.38:£1 average, with sales expected to grow 2% to 4%.

BAE confirmed its interim dividend of 10.4p per share will be paid on November 30, 2022.

Sam Boughedda
Sam is a trader and lead stock market writer at AskTraders. After starting his career in the forex market, Sam now focuses on stocks, specifically consumer staples.