BAE Systems has posted an 11% rise in sales to £14.6bn in its opening half results as the defence giant reported growth in all segments of its business.

The group’s underlying pre-tax earnings for the six months to 30 June were also up by 13% on the previous year, totalling £1.6bn.

Amid higher military spending around the globe, BAE revealed that it had secured £13.2bn of orders in its first half and made “good progress” on executing its long-term major programmes. The group closed the H1 period with an order backlog of £75.4bn.

As a result, BAE has upgraded its sales and earnings guidance for the full year by 100 basis points each. The defence company now expects its sales to increase in the range of 8% to 10% while its underlying earnings are expected to increase in the range of 9% to 11%.

“Our teams have delivered another strong operational and financial performance in the first half of the year, giving us the confidence to upgrade our guidance,” said BAE Systems chief executive, Charles Woodburn.

“In this heightened global threat environment, we continue to deliver mission critical capabilities to armed forces around the world and invest in our people, technologies and facilities to drive the improved efficiency, capacity and agility needed to meet the increasing demand for our highly relevant products and services.”

In its trading statement, BAE also indicated that the share price increase it has overseen since the start of the year is expected to now result in fewer shares being repurchased.

Along with a marginally higher tax rate, the company said its earnings per share (EPS) growth guidance would remain unchanged at between 8% to 10%.

“Overall demand for BAE’s products and services has remained strong over the first half, helping new orders flow in and keeping the order backlog at a mammoth £75.4bn, just shy of record levels,” commented equity analyst at Hargreaves Lansdown, Aarin Chiekrie.

“With NATO members recently committing to boost defence spending from 2% to 5% of GDP by 2035, that figure looks set to rise even further in the years ahead.

“These orders are typically long-cycle, with programmes spread over many years, giving BAE great revenue visibility. It’s these defensive characteristics in an uncertain macroenvironment that have helped boost BAE’s valuation, which now sits well above its long-run average. But with a new super cycle of defence spending underway, there could be a long runway of growth ahead if BAE can execute well.”

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