Spending on defence fuels boom at BAE

DEFENCE giant BAE systems has seen its profits soar on the back of political instability in the Middle East and the growing threat of ISIS.

Ian King, chief executive of the world’s third largest military equipment maker, said an increase in military spending by governments including Britain and the United states had boosted business.

‘In the past defence wasn’t a top priority, but [the rise in conflicts] has reminded governments that their first priority is the defence of their nation and they are taking it more seriously,’ he said.

‘People understand what we do matters and is important for the nation, but it’s not going to appeal to every part of society.’

King said he had to ‘pinch’ himself over the potential for new orders – and amid speculation over who may replace him declared: ‘ I have no plans to leave.’

He noted that the improved outlook for the business was ‘good for morale and good for recruitment prospects’, adding: ‘There is now a desire for people to work in this sector.’ The comments came as BAE posted profits of £1.1bn for 2015, up from £882m the previous year, after sales hit £17.9bn. BAE, which makes Typhoon fighter jets and is negotiating the £31bn renewal of the Trident nuclear submarine programme with the Government, benefited from an order from saudi Arabia for 22 Hawk aircraft.

King said the contract was a ‘strong indicator’ that talks with saudi over a fresh Typhoon order were progressing given Hawk jets are used to train Typhoon pilots.

The company also won a string of new work from the Royal Navy and the Us Air Force.

The dividend increased to 20.9pa- share, up from 20.5p, the 12th consecutive year of dividend growth. The shares rose 5.7p to 505p.