Yahoo Finance BAE shares surge as Ukraine invasion puts spotlight on defence
Shares in Britain's biggest defence company BAE Systems (BA.L) soared over 6% after Russian troops invaded Ukraine in the biggest attack in Europe since the Second World War.
The Weapons maker said the unfolding unrest in the region would "sharpens focus" on defence.
Rising tensions in Europe are also expected to boost BAE’s revenues in the coming year. It said the "uncertain global environment" and "complex threats" that currently face the world’s major powers will provider a bump.
BAE noted that countries including France and Germany are upping their defence budgets in order to ensure they spend 2% of their GDPs on defence, in line with NATO requirements.
The defence firm said it reviewed its business and did not believe the impact on its suppliers or supply chains was material. However, it said it was "disappointed" that diplomacy appeared to have failed.
It comes as the arms manufacturer reported "strong results", on the back of mounting geopolitical tensions, after its sales rose 2% in 2021 to £21.3bn ($28.5bn).
Revenues at the defence contractor rose to £19.5bn for 2021, up from the £19.2bn in the year prior, while the group's operating profit jumped 13% from £1.9bn to £2.3bn over the same period — ahead of forecast.
The FTSE 100 (^FTSE) company said its orders exceeded expectations last year after its sales increased by £448m.
The firm said it anticipates "another year of good orders" in 2022 anticipating a sales growth of 2% to 4% this year. "We are well positioned for sustained top-line and margin growth in the coming years," CEO Charles Woodburn said.
Shares in the company were up 6.1% to in afternoon trade in London on Thursday.
BAE Systems also said that it has completed a £500m share buyback scheme in February that it first announced in July last year, as it upped its dividend by 6%.
Growth is forecast across all sectors in the coming years, with cyber intelligence also becoming globally relevant. "Defensive security remains a priority for governments as they seek to invest in sovereign capabilities to protect their nations and citizens from emerging threats," Woodburn said.
Read more: What Ukraine invasion means for UK consumers
In its full year 2021 results, the builder of combat ships, submarines and fighter jets, whose main customers are the US, UK and Saudi Arabia said it generated 43% of its sales from the US, 20% from the UK, and 12% from Saudi Arabia.
Heightened tensions between Australia and China, also saw Australia account for 4% of the firm’s 2021 sales. "Our portfolio is well positioned to benefit from increased defence spending in Asia Pacific through our Australia business," the company said.
Net debt (excluding lease liabilities) decreased to £2.2m, down from £2.7m in 2020.
Watch: Rishi Sunak: Russia's actions already leading to market volatility
