BAE holds guidance, sees benefits from AUKUS submarines deal

UK defence contractor BAE Systems maintained guidance for annual earnings growth and said the recent controversial pact agreed between Britain, Australia and US could be beneficial.

The submarine and fighter jet maker said it still expected earnings to grow by 3% to 5% year on year, adding that it had mitigated the impact of global supply chain constraints due to the long-lead positions on its programmes.

“Our geographic diversity positions us positively post-pandemic as many of the countries we operate in have published plans to increase their spending to counter evolving threat environments,” BAE said.

It said it was “well positioned to benefit from increased defence spending in Asia Pacific through our Australia business, which is already set to grow significantly due to our contracted positions, and through export opportunities from our UK, US and Australian business to the region”.

The recent AUKUS announcement, which saw Australia cancel a £50bn diesel submarine contract with France’s Naval, caused fury in Paris, with French President Emmanuel Macron accusing beleaguered Australian Prime Minister Scott of lying over the u-turn.

Under the AUKUS pact, Australia will buy US nuclear-powered submarines, which BAE was “strategically significant”.

"This is a clear example of how nations are looking to co-ordinate capabilities in multi-domain operations to address the threat environment," BAE said.

BAE added it had so far completed £308m of a £500m share buyback programme announced earlier this year.