By Anthony O. Goriainoff

BAE Systems said it expects sales and earnings will continue to grow as governments ramp up spending on military equipment amid escalating geopolitical tensions after key metrics last year beat analysts' expectations.

The U.K. defense-and-aerospace group said Wednesday that sales should grow 10% to 12% in 2024 compared with 25.28 billion pounds ($31.91 billion) that BAE reported for 2023. This compares with analysts' estimates of GBP24.75 billion for last year, according to a company-compiled forecast, and GBP23.26 billion in 2022.

It also expects underlying earnings per share to grow 6% to 8% this year, with free cash flow of more than GBP1.3 billion.

Arms makers in Europe have been thriving since Russia invaded Ukraine almost two years ago. Members of the North Atlantic Treaty Organization have been shipping tanks, rocket launchers, air defenses, ammunition and other military equipment to Ukraine, and are now turning to weapon manufacturers to replenish their stockpiles.

In December, BAE Systems secured a 10-year contract worth up to $8.8 billion to manage the U.S. Army's main ammunition plant in Tennessee as efforts continue to increase production of artillery shells, missiles and other weapons. BAE's M777 howitzer artillery has been widely used by Ukrainian forces.

"Our performance, combined with our global footprint and record order intake, means we're well-positioned for sustained growth in the coming years," Chief Executive Charles Woodburn said.

The group's order intake rose to GBP37.7 billion in 2023 from GBP37.1 billion the previous year, with an order book at Dec. 31 of GBP58 billion, compared with GBP48.9 billion previously.

Pretax profit rose to GBP2.33 billion from GBP2 billion, with revenue increasing to GBP23.08 billion from GBP21.26 billion the year prior.

Net profit rose to GBP1.86 billion from GBP1.59 billion, beating FactSet-provided analysts' consensus of GBP1.84 billion.

Free cash flow rose to GBP2.59 billion from GBP1.95 billion, also beating an GBP1.82 billion estimate.

Underlying earnings per share--a metric that strips out exceptional and other one-off items--on a constant currency basis rose 14% to 63.2 pence. Analysts had forecast 62.5 pence, according to the same consensus that excludes the acquisition of Ball Corp.'s aerospace business.

The board declared a final dividend of 18.5 pence, up from 16.6 pence in 2022, bringing the total for the year to 30.0 pence a share.

Shares at 0802 GMT were down 5.50 pence, or 0.4%, at 1,248 pence.

Write to Anthony O. Goriainoff at

(END) Dow Jones Newswires

02-21-24 0318ET