By Cristina Gallardo

BAE Systems posted double-digit sales growth last year, boosted by increased defense budgets in its main markets due to Russia's war in Ukraine.

The London-listed aerospace and defense manufacturer said Wednesday that sales in 2024 rose by 14% on a constant-currency basis to 28.335 billion pounds, equivalent to $35.74 billion.

The FTSE 100 group, which makes a range of military equipment and provides cybersecurity services, said its order backlog reached a record 77.8 billion pounds at the end of 2024, beating a Visible Alpha estimate of 74.45 billion pounds. The company's order intake came to 33.7 billion pounds.

Orders were boosted by long-term programs in the U.K. and the U.S., warship contracts with Australia, increased munitions demand, and fresh orders for Eurofighter Typhoon fighter jets from Italy and Spain.

Underlying earnings before interest and taxes--the group's preferred measure of profitability--rose to 3.015 billion pounds from 2.68 billion pounds.

All business areas contributed to the results, with electronic systems and platforms and services units performing particularly well, BAE Systems said.

Earnings were further boosted by Colorado-based Ball Aerospace, a supplier of satellite systems, antenna arrays and other location products bought by BAE Systems in a bid to deepen its relationship with the National Aeronautics and Space Administration. Its integration into the group's U.S.-based Space and Mission Systems business is going well and enabling cost synergies at SMS, BAE Systems said.

"We remain confident in the positive momentum of our business into the future," Chief Executive Charles Woodburn said, citing the company's record order backlog.

The British company is waiting for clarity on the North Atlantic Treaty Organization's new defense-spending target, which allies are expected to set at the group's annual summit in The Hague in late June, Woodburn told investors during a call Wednesday. NATO's Secretary General Mark Rutte suggested last week that the target should rise from the current 2% of members' gross domestic product to "considerably" higher than 3% in order to fill holes in the alliance's military preparedness and to help deter Russia from any potential attacks in the future.

Woodburn said BAE Systems needs clarity on NATO's medium and long-term military requirements in order to plan production accordingly.

As European governments grapple with the need to consolidate the number of military platforms they use and increase weapons productions across the continent, Woodburn suggested that MBDA--a joint venture between Airbus, BAE Systems and Leonardo to produce missiles--could serve as a potential blueprint for more pan-European collaborations.

The group is also ramping up ammunition production, with new factories coming into operation to meet higher demand for artillery shells across Europe. It hopes in the coming months to increase ammunition production eightfold compared with levels before Russia's large-scale invasion of Ukraine in February 2022, Woodburn said.

For 2025, BAE Systems guided for sales growth of up to 9% and organic growth of 6%-8%, while earnings should rise by between 8% and 10%, it said.

Matt Dorset, equity analyst at Quilter Cheviot, said the company has substantial exposure to European demand, just as the continent, including the U.K., prepares to raise defense spending. "We continue to see structural tailwinds supporting BAE, driven by increased global defense spending," he said.

BAE Systems' board declared a dividend of 20.6 pence, taking the total dividend to 33 pence a share, up 10% on year.

In morning trading, London-listed shares were down 2.1% at 13.08 pounds. The stock has risen 5.2% in the last 12 months.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

February 19, 2025 04:15 ET (09:15 GMT)

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