Weapons maker BAE profits rocket

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Profits were up by almost a third at defence contractor BAE Systems, for the first half of 2017.

It’s recent performance has led investment bank Goldman Sachs to dub it a “Best of British” stock option.

Evolution not revolution

The new CEO is set to continue his predecessor’s successful legacy of focussing on competitiveness, operational excellence and technology.

Trump

The company’s biggest market is the US. With President Trump’s determination to increase the defence budget to support his hawkish policies, revenue growth should continue.

Back home

Whilst the UK is a significant market, there’s no anticipated uptick in purchasing activity.

However, BAE recently signed a contract to build 3 new warships for the Royal Navy. This could attract Australia and Canada’s attention; both countries are also seeking to bolster their navies.

Cyber security, whilst a small division of the firm, is experiencing rapid growth. Although its just taken a restructuring hit, it’s expected to be a future key revenue contributor.

And with an expected order from Saudi Arabia for Typhoon jets, the company may find itself dragged back into the political arena, given the country’s controversial role in Yemen.

The future

There’s hope that if global austerity programmes do begin to ease, it will revitalise the defence industry.

However, the nature of warfare is changing: guns are useless against cyber threats nor are tanks effective in defeating homegrown terrorism. The industry must adapt in order to deal with this modern way of waging war.

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