War on Ukraine bolsters demand at BAE

BAE Systems revealed yesterday that it is cashing in on soaring demand caused by the war in Ukraine and expects a ‘very strong’ year of orders.

As Rishi Sunak unveiled plans for the defence group to build five more submarinehunting warships, the company said Russia’s invasion of its neighbour and rising tensions elsewhere have demonstrated ‘more than ever’ the need for strong security.

With BAE welcoming rising defence spending across the globe, its shares rose 1.7pc, or 12.4p, to 738.6p. The FTSE 100 business has secured £28bn of orders so far this year, with £10bn of that since July.

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

But a spokesman for the group said ‘the commitment to defence in our major markets remains robust’. That includes in the UK where BAE will now build another five submarine-hunting Type 26 frigates under the latest deal 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 jobs in the UK.

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

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

And it will supply the US Army with its Beowulf all-terrain vehicles, designed to operate in snowy, icy, sandy, muddy and swamp-like conditions. A BAE spokesman said: ‘Many of the countries in which we operate have either announced increases or are making plans to increase spending to address the elevated threat environment.

‘Global events have more than ever demonstrated the need for strong defence and security in the face of aggression by nation states.’ The group’s chief executive Charles Woodburn said: ‘We see sales growth coming from all sectors and opportunities to further enhance the medium-term outlook as our customers address the elevated threat environment.’

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

AJ Bell investment director Russ Mould said the turbulent geopolitical picture is ‘good news’ for the defence firm.

‘Countries are making long-term commitments to upgrade their military capability and capacity and that brings with it longterm growth potential for BAE,’ he said.

BAE also sought to burnish its environment, social and governance (ESG) credentials. The spokesman said: ‘It is important to recognise the defence industry’s contribution to security and prosperity and that BAE is a responsible, government-backed, strictly regulated and ethically-led defence and security company.’