BAE Systems PLC (LSE:BA.) said it has seen a good performance so far this year as it reiterated its guidance for full-year revenue and profits.
“Our continued good operational performance underlines our confidence in the full-year guidance for top line growth and margin expansion as well as our three-year cashflow target,” said chief executive Charles Woodburn in a trading statement.
The defence contractor stuck to its forecasts for sales growth of 3%-5% for 2021, while underlying earnings before tax interest and tax (EBIT) are expected to rise by between 6% and 8%.
It expects free cash flow above £1bn for the current year, with cumulative free cash flow estimated to exceed £4bn for the 2021-2023 period.
BAE said supply chain constraints have not materially impacted on its performance, but that it continues to mitigate against such challenges.
“In many cases, we benefit from long-term programme positions and incumbencies with more stable forward visibility for long-lead items allowing us to continue to actively manage supplier lead times against demand requirements,” the company pointed out.
The group said demand for its capabilities remains high and its pipeline of opportunities is strong.
It noted key contracts won by its Electronic Systems business, marked by the Limited Interim Missile Warning System, which is worth up to US$872mln, and the F-35 electronic warfare system readiness awards, with a value of US$93mln over five years.
Many of the countries and regions where the company operates are planning increases in their defence spending, putting BAE in a good position to secure contracts.
It highlighted the recent “strategically important” AUKUS defence pact signed between Australia, the UK and the US in September, which will allow Australia to build nuclear-powered submarines for the first time and which also covers artificial intelligence (AI) and other technologies.
“As the largest defence provider in the UK and Australia and a top 10 prime contractor to the US DoD [Department of Defense] we are well positioned to support our government customers in these nations as discussions progress,” the group said.
BAE also announced that it has completed £308mln of the £500mln share buyback programme announced alongside its interim results.