By Cristina Gallardo

The U.K. defense and aerospace group BAE Systems is scheduled to report results for 2024 on Wednesday. Here is what you need to know.

SALES FORECAST: The London-listed manufacturer--which makes a range of war equipment and also provides cybersecurity services--is expected to report average sales of 28.115 billion pounds ($35.50 billion) in 2024 and 30.45 billion pounds in 2025, according to a company-compiled consensus. This compares with sales of 25.28 billion pounds in 2023.

NET INCOME: Analysts expect BAE Systems to report 1.95 billion pounds in 2024, according to a consensus estimate provided by Visible Alpha, up 5.4% on year from 1.85 billion pounds.

EBIT: Underlying earnings before interest and taxes--the group's preferred measure of profitability--is forecast to reach an average of 3 billion pounds in 2024, according to a company-compiled consensus, compared with 2.68 billion pounds in 2023.

WHAT TO WATCH

Shares traded at 13.47 pounds in early morning trade, up 8.4% over the past 12 months.

--At the end of 2023, BAE Systems' order backlog was 69.8 billion pounds, boosted by long-term programs in the U.K., U.S., Australia and Saudi Arabia. The company said it has a prospective pipeline of about 180 billion orders thanks to new-build or continuing maintenance programs for the F-35 fighter jets, the Typhoon aircraft, Dreadnought submarines, and newly-won contracts.

--BAE continues to expect growth opportunities in the U.S. in the medium term because its portfolio remains well-aligned with the priorities set out in the country's national defense and intelligence strategies. However, investors will be keen to hear from BAE's management on the potential impact of the reform of U.S. defense procurement floated by the new administration, UBS analyst Ian Douglas-Pennant said. He highlighted uncertainty about this potential reform as the main reason for BAE's recent share-price underperformance.

--The possibility of increased military spending has boosted European defense stocks for some time, and BAE Systems has emerged as one of the top picks by investors during this period, Richard Hunter, head of markets at interactive investor, said. BAE's price pulled back a little from June's record high, possibly due to the 3.8 billion pounds in debt taken on to fund the acquisition of Ball Aerospace from Ball Corp. last year, AJ Bell said.

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

(END) Dow Jones Newswires

February 18, 2025 05:33 ET (10:33 GMT)

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