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Britain's BAE names new chair, expects more defence spending

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FILE PHOTO: British Royal Air Force's Typhoon Eurofighter jets fly over Britain
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By Sachin Ravikumar

LONDON (Reuters) -BAE Systems, Britain's biggest defence company, named Cressida Hogg as its next chair on Thursday, as it reported stronger-than-expected half-year earnings, announced a share buyback plan and anticipated the Ukraine war would drive client spending.

With Hogg's appointment, Britain's three biggest publicly listed defence companies - BAE, Rolls-Royce and Babcock International - will all be chaired by women.

The builder of combat ships, submarines and fighter jets said Hogg, currently chair at commercial landlord group LandSec, would become chair designate from November, and succeed retiring Roger Carr next year.

Hogg, also a board member at the London Stock Exchange Group, has two decades of experience in the investment industry and in growing British and global businesses, analysts at Barclays said.

The company said it foresaw increased defence spending globally in light of the Ukraine war, and that it was supporting customers for mission critical activities.

"Across Europe and further afield, we're seeing countries up their defence budgets as they move to, and sometimes beyond, the NATO commitment of 2% of GDP," Chief Executive Charles Woodburn told reporters.

"Given the numerous defence spending announcements around the world, we see additional opportunities to further improve the outlook."

BAE's shares have risen more than 20% since Russia invaded Ukraine in February, reaching an all-time high of 847 pence earlier this month. They fell nearly 1% in early trading on Thursday.

Its underlying earnings before interest and taxes (EBIT) rose 8.2% year-over-year to 1.11 billion pounds ($1.35 billion) in the six months to June 30, while sales climbed 5% to 10.58 billion pounds.

Those results beat analysts' average expectations for sales of 10.45 billion pounds and underlying EBIT of 1.07 billion pounds, according to company-supplied estimates.

The company, which plans to fly a demonstrator of Britain's next-generation fighter jet in the next five years, said it would buy back shares worth up to 1.5 billion pounds and boost its interim dividend by 5%.

($1 = 0.8207 pounds)

(Reporting by Sachin Ravikumar, Editing by Paul Sandle and Barbara Lewis)

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