Confident BAE sees shares rise

Shares in BAE Systems jumped yesterday after the company signalled its confidence that it would weather Government spending cuts impacting on the sector.

The defence and security giant offset a drop in earnings in the six months to June 30 by raising its dividend by seven per cent and announcing the purchase of £500m of its shares. Analysts described the pay-out as reassuring at a time of poor sentiment towards the defence sector and the shares performed strongly, closing up just under 15p at 3061p, a rise of 5.13 per cent.

The implications of defence spending reviews in the UK and the United States has led BAE to shed more than 15,000 jobs over the past two years in order to boost competitiveness. However, it has also looked to target faster growing markets such as cyber and intelligence products and high-end electronics.

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BAE said revenues fell 13 per cent to £9.2bn in the six months to June 30. Underlying earnings were 12 per cent lower at £968m after a charge of £160m to cover the cost of an offshore patrol vessel project.

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