War on Ukraine bolsters demand at defence group BAE

BAE Systems revealed yesterday that it is benefiting from rising demand due to the war in Ukraine and expects a “very strong” year of orders.

As Rishi Sunak unveiled plans for the defense group to build five more submarine-hunting warships, the company said the Russian invasion of its neighbor and rising tensions elsewhere have shown “more than ever” the need for strong security.

With BAE welcoming rising defense spending around the world, it is shares rose 1.7 percent, or 12.4p, to 738.6p.

The FTSE 100 business has taken in £28bn in orders so far this year, with £10bn since July.

Ahead of Chancellor Jeremy Hunt’s fiscal statement tomorrow, BAE acknowledged that governments around the world are facing financial challenges.

But a spokesperson for the group said “the commitment to defense in our key markets remains robust.”

That includes the UK, where BAE will now build five more Type 26 frigates for submarine hunting under the latest agreement with the Royal Navy, the prime minister announced.

The deal – which the Mail reported in August was close to being signed – will support shipbuilding facilities in Scotland into the 2030s and more than 4,000 UK jobs.

BAE is already building three of the warships at its Govan shipyard in Glasgow under a £3.7 billion deal signed in 2017.

Other orders included a deal to make infrared heat-seeking technology for Lockheed Martin’s anti-missile defense system.

And it will provide the US military with its Beowulf off-road vehicles, designed to operate in snowy, icy, sandy, muddy and swampy conditions.

A BAE spokesman said: “Many of the countries in which we operate have announced increases or are making plans to increase spending to address the heightened threat.

“Global events have demonstrated more than ever the need for strong defenses and security in the face of aggression by nation states.”

Group CEO Charles Woodburn said: “We see revenue growth from all sectors and opportunities to further improve the medium-term outlook as our clients address the heightened threat environment.”

BAE was one of the best performing stocks on the FTSE 100 this year.

AJ Bell investment director Russ Mold said the turbulent geopolitical picture is “good news” for the defense firm.

“Countries are making long-term commitments to improve their military capabilities and capabilities and that brings long-term growth potential for BAE,” he said.

BAE also sought to polish its environmental, social and governance (ESG) credentials.

The spokesperson said: ‘It is important to recognize the defense industry’s contribution to security and prosperity and that BAE is a responsible, government-backed, strictly regulated and ethically run defense and security company.’