2019 Full-year results video still
2019 full-year results
“2019 has been a year of significant progress for BAE Systems. We delivered a good set of financial results in line with guidance, growing sales and earnings, with improved operational performance and increased investment in the business to underpin our growth outlook. Strategically we took a number of actions to strengthen the portfolio and the pensions agreement announced today is good for all stakeholders. These will help to accelerate our strategy and further our growth outlook. We have a large order backlog and remain focused on strong programme performance to deliver a sustainable business model with enhanced financial performance.”

Results in brief

Financial performance measures as defined by the Group
Underlying EBITA
Underlying earnings per share
excluding one-off tax benefit
including one-off tax benefit
Operating business cash flow
Net debt
Order intake
Order backlog
Post-employment benefits and dividend
Group’s share of the net post-employment benefits deficit
Dividend per share
Financial performance measures defined in IFRS
Operating profit
Basic earnings per share
Net cash flow from operating activities



Financial highlights


Financial performance measures as defined by the Group
  • Sales increased by £1.7bn, a 7% increase, excluding the impact of currency translation.
  • Underlying EBITA increased to £2,117m, a 5% increase on a constant currency basis and excluding the impact of IFRS 16.
  • Underlying earnings per share increased by 7% to 45.8p (excluding the one-off tax benefit).
  • Operating business cash flow increased by £314m to £1,307m.
  • Net debt decreased to £743m.
  • Order intake of £18.4bn.
  • Order backlog of £45.4bn.
Financial performance measures defined in IFRS
  • Revenue increased by £1.5bn, a 7% increase, excluding the impact of currency translation.
  • Operating profit increased by £294m to £1,899m, including £27m of non-recurring charges (2018 £154m).
  • Basic earnings per share increased by 48% to 46.4p.
  • Net cash flow from operating activities increased by £397m to £1,597m. Under IFRS 16 net lease cash outflows of £273m are now classified under financing and investing activities.
Post-employment benefits and dividend
  • Group’s share of the pre-tax accounting net post-employment benefits deficit increased by £0.5bn to £4.5bn compared with 31 December 2018.
  • After consultation with the The Pensions Regulator in the UK, the Group has reached agreement with the Trustee Board of the combined pension scheme on the accelerated funding valuation and a revised deficit recovery plan.
  • At the 31 October 2019 funding valuation date, the deficit was £1.9bn. The current deficit recovery plan which runs to 2026 will be replaced by a new deficit recovery plan, under which a one-off payment of £1bn is to be made in the coming months, with approximately £240m of funding payable in the scheme year ending 31 March 2020 and approximately £250m by 31 March 2021.
  • Final dividend of 13.8p making a total of 23.2p per share for the year, an increase of 4.5% over 2018.
One-off tax benefit
  • A one-off tax benefit of £161m was recognised in the year, arising from agreements reached in respect of overseas tax matters, net of a provision taken in respect of the estimated exposure arising from the EU’s decision regarding the UK’s Controlled Foreign Company regime.

Operational and strategic key points

  • Qatar Typhoon and Hawk aircraft programme met its contractual milestones in the year. Contract amendment agreed to accelerate Typhoon deliveries
  • F-35 programme Lots 12 to 14 price negotiations concluded. 142 rear fuselage assemblies delivered in the year in line with ramp-up to full rate production in 2020
  • Tempest technology maturation programme contracted between industry and UK government. Italy and Sweden governments committed to working with UK to develop next-generation combat air capability
  • The first four Hawk aircraft assembled in Saudi Arabia were accepted and entered service in-Kingdom
  • UK Tornado fleet successfully retired from service on schedule following RAF declaration that Typhoon had met Centurion standard with embodiment across the Typhoon fleet
  • The design and production readiness phase of the Hunter Class programme for the Royal Australian Navy continues to make good progress
  • HMS Prince of Wales vessel acceptance achieved in December
  • Four River Class Offshore Patrol Vessels have now been accepted, with the programme on target for completion in 2020
  • Construction commenced on second of the three contracted Type 26 frigates in August
  • Construction of the first Dreadnought Class submarine continues to advance, with £1.4bn of funding received in the year
  • Sea trials for the fourth Astute Class submarine are due to take place in 2020
  • A £230m seven-year Torpedo Repair and Maintenance contract was awarded
  • The UK combat vehicles joint venture between Rheinmetall and BAE Systems Land UK was launched on 1 July
  • Design requirements for the Canadian Surface Combatant are progressing towards finalisation with partners and the Royal Canadian Navy
Electronic Systems
  • Growing demand for Advanced Precision Kill Weapon System (APKWS®) laser-guided rockets, with production awards totalling over $400m (£302m) received in the year
  • Over 500 electronic warfare systems delivered for the F-35 Lightning II programme, and awarded production and Block 4 modernisation contracts worth more than $750m (£566m)
  • Acquired Riptide Autonomous Solutions to advance capabilities in maritime mission requirements
  • Continuing growth in space resilience domain
  • Establishing new facilities in Huntsville, Alabama and Manchester, New Hampshire to meet the record order backlog
  • Active inceptors certified for Gulfstream G500 and G600 jets and in production
  • Battery electric and fuel cell electric transit systems recorded five million zero emission miles
Platforms & Services (US)
  • Deliveries of the M109A7 self-propelled howitzer and ammunition carrier vehicle sets are progressing and the decision to proceed to full-rate production was made in Q1 2020
  • First deliveries achieved of the Amphibious Combat Vehicle to the US Marine Corps
  • Contract modification award of $575m (£434m) received for LRIP vehicles on the Armored Multi-Purpose Vehicle programme
  • Work underway to upgrade 332 vehicles to the Bradley A4 configuration
  • Awarded contracts worth $466m (£352m) to upgrade configuration on various M88 vehicles
  • First tandem docking of two large warships in San Diego dry-dock for contracts worth more than $170m (£128m)
  • Deliveries continue of the M777 ultra-lightweight howitzer to the Indian Army, with subsequent systems to be assembled at the Mahindra Defence Systems facility
Cyber & Intelligence
  • Received orders exceeding $100m (£76m) to provide logistics sustainment support to US Air Force Space Command
  • Awarded $437m (£330m) task order to provide open source support to US Army and Army Intelligence & Security Command approved partners
  • Technology offerings further developed and the business achieved four Amazon Web Services designations, recognising our technical proficiency and operational excellence
  • Divestment of the Silversky business and exit from the UK-based Managed Security Services business in progress at year-end. Restructuring charge of £20m recognised in the year
  • Strong order intake and revenue growth in the Government business unit
Guidance for 2020
Whilst the Group is subject to geopolitical uncertainties, the following guidance is provided on current expected operational performance.
Impacts from the proposed acquisitions announced in January of the Collins Aerospace Military Global Positioning business and Raytheon’s Airborne Tactical Radios business are not included in the following guidance.
Group guidance
For the year ending 31 December 2020, the Group’s underlying earnings per share is expected to grow by mid-single digit percentage compared to the full-year underlying earnings per share in 2019 of 45.8p, assuming a $1.30 to sterling exchange rate.
The guidance is based on the measures used to monitor the underlying financial performance of the Group. Reconciliations from these measures to the financial performance measures defined in International Financial Reporting Standards for 2019 are provided on pages 14 to 16.

For associated materials, please visit: https://baesys.resourcespace.com/?c=835&k=9c0c37964c

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Kristina Anderson
Director, Media Relations
Corporate Communications

+44 (0) 7540 628673

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