BAE Systems raises dividend, launches new buyback on strong outlook

British defence company BAE Systems lifted annual guidance thanks to a good operational performance and said as a result it would raise the dividend by 5% and launch a 500 million pound ($697 million) share buyback programme. The plan from BAE, which builds combat ships, submarines and fighter jets, to increase returns for investors stands out at a time when many companies have suspended their dividends to conserve cash and ride out the impact of COVID-19.


Reuters | Updated: 29-07-2021 12:24 IST | Created: 29-07-2021 12:11 IST
BAE Systems raises dividend, launches new buyback on strong outlook
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British defence company BAE Systems lifted annual guidance thanks to a good operational performance and said as a result it would raise the dividend by 5% and launch a 500 million pound ($697 million) share buyback programme.

The plan from BAE, which builds combat ships, submarines and fighter jets, to increase returns for investors stands out at a time when many companies have suspended their dividends to conserve cash and ride out the impact of COVID-19. Defence has been one of the few sectors largely unaffected by the coronavirus pandemic, with governments sticking to military and security commitments, and in some cases raising them. BAE's main customers are the U.S., UK and Saudi Arabia.

For the full-year, BAE said it expected underlying earnings per share to grow by 3% to 5% over last year's result, despite the strengthening of the pound against the dollar and even if the higher exchange rate continues, representing an improvement on previous forecasts. BAE Systems said that it derived confidence from ongoing projects, as its facilities delivered over 900 electronic warfare systems to the F-35 fighter jet programme, and automation improvements helped it ramp up production of combat vehicles.

For the half-year ended June 30, BAE said it would pay an interim dividend of 9.9 pence per share as well as commence a 12-month share buyback programme. Underlying earnings per share rose 25% to 21.9 pence in the period, it said. ($1 = 0.7177 pounds)

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