BAE Systems plc (LON:BA) will hold its Annual General Meeting today at 11.00 a.m. in Farnborough, Hampshire, UK. At the meeting, Chairman, Sir Roger Carr, and Chief Executive, Charles Woodburn, will comment on the performance of the Group in 2018, as detailed in the results announcement published on 21 February 2019, and outline the continued progress in the Group in the year to date.
Charles Woodburn, Chief Executive, said: “With a record defence order backlog and long term programme positions the business is well positioned for growth. Our priority is to deliver consistent and strong operational performance for our customers and shareholders. The start to the year has been in line with expectations with improvements being made on a number of fronts.”
Whilst the Group remains subject to geopolitical uncertainties, the Group’s guidance provided at the Preliminary announcement on 21 February remains unchanged for 2019 for underlying earnings per share and Net Debt and for the three-year cash generation target. As usual operating cashflow in 2019 is expected to be significantly second half weighted.
The results of voting at the Annual General Meeting will be announced later today.
Market environment and operational key points year to date
UK Market and Programmes
In the UK, Defence and Security remains a priority for the UK government with the next phase of the Tempest next generation combat air programme contracted between industry and UK government.
The focus for the year continues to be on the execution of the Group’s long-term contracted positions in Air and Maritime. The production ramp on the F-35 programme progresses well. Typhoon support continues to perform strongly and, with the centurion standard having been declared, the UK Tornado fleet successfully retired from service on schedule.
On the Offshore Patrol Vessels programme the second ship of five, HMS Medway, has been accepted by the customer. This programme is due to complete in 2020. On the Carrier programme HMS Prince of Wales remains on track for sea trials later in 2019. The Type 26 programme is progressing towards its first of class contractual acceptance date in the mid 2020s. Work continues on the manufacture of the remaining four Astute class submarines with Boat 4 due to exit Barrow in 2019. Activity on the Dreadnought programme is ramping up along with the major programme of building works at the Barrow site required to deliver the programme.
US Market and Programmes
In the US, the fiscal year 2019 budget and the President’s proposal for 2020 maintain the positive momentum in funding for military readiness and modernisation and support for key BAE Systems programmes. The Group’s US portfolio remains well aligned with customer priorities and growth areas, providing greater near-term certainty and support to our medium term planning assumptions. Performance in Electronic Systems remains strong as production ramps on F-35, APKWS and classified programmes continue on plan.
Following the challenges on the M109A7 Paladin Integrated Management production in 2018, gradual improvements are being made towards achieving the revised production schedule that ramps to eight vehicles per month by year-end. Lessons learned are being applied to the other combat vehicle programmes of Armored Multi-Purpose Vehicle, Bradley A4 and Amphibious Combat Vehicle. Whilst in the early stages of initial production, these programmes to date are currently on track.
With the final commercial ship constructed and delivered, the ship repair business is now focused on its core mission and working with the Navy on its acquisition strategy for ship maintenance to improve utilisation levels.
International Markets and Programmes
Following the recent updates from the German Government regarding export licences, we are working closely with industry partners and the UK government to continue to fulfil our contractual support arrangements in Saudi Arabia on the key European collaboration programmes.
The Qatar Typhoon and Hawk contract is progressing well with contractual milestones being met.
In Australia the Hunter class frigate programme is in the early stages of mobilisation under the initial four-year design and development phase.
The Group will hold an Investor event in the UK on the 15th and 16th May focused on its Air Sector business.
BAE Systems will announce its financial results for the half year ending 30 June 2019 on 31st July 2019.
The Board and directors
As previously announced Nicole Piasecki and Stephen Pearce will join the Board on 1st June 2019.