"BAE Systems’ performance in the first half was consistent with our expectations and guidance for the year. We have a sound platform for medium-term growth underpinned by a clear and consistent strategy. Strong programme execution, technology and enhanced competitive positions will be key in driving the business forward, and we will continue to focus on efficiency and meeting our customers’ affordability challenges. With the expected improvement in the defence budget outlook in a number of our markets, the Group is well placed to continue to generate good returns for shareholders.”

Results in brief

Six months ended
30 June 2017
Six months
30 June
31 December 2016
Underlying EBITA
Underlying earnings per share
Operating business cash flow
Net debt
Order intake
Order backlog
Group’s share of the net pension deficit
Dividend per share


Financial highlights

Financial performance measures as defined by the Group1
  • Sales increased to £9.6bn, up 4% on a constant currency basis5.
  • Underlying EBITA increased by 11% to £945m, or 5% on a constant currency basis5.
  • Underlying earnings per share increased by 14% to 19.8p.
  • Operating business cash flow of £277m.
  • Net debt of £1.7bn.
  • Order intake increased by £3.6bn to £10.7bn and includes award of a production contract for the initial batch of three Type 26 frigates.
  • Order backlog increased to £42.3bn after adverse exchange translation of £0.4bn.
Financial performance measures defined in IFRS2
  • Revenue increased to £9.0bn, up 3% on a constant currency basis5.
  • Operating profit increased by 11% to £865m, or 5% on a constant currency basis5.
  • Basic earnings per share increased by 36% to 17.5p.
  • Net cash flow from operating activities of £341m.
Other financial highlights
  • Group’s share of the pre-tax accounting net pension deficit reduced to £5.9bn (31 December 2016 £6.1bn).
  • Interim dividend increased by 2% to 8.8p per share.
  1. We monitor the underlying financial performance of the Group using alternative performance measures. These measures are not defined in International Financial Reporting Standards (IFRS) and, therefore, are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate. For alternative performance measure definitions see glossary below.
  2. International Financial Reporting Standards.
  3. Re-presented to reclassify interest paid from operating to financing activities.
  4. Interim dividend declared (see note 6).
  5. Current period compared with prior period translated at current period exchange rates.
Operational and strategic highlights
  • The full £3.7bn production contract for the initial batch of three Type 26 frigates was signed in June, with order intake of £2.8bn in the period.
  • Received the full £1.4bn contract for the sixth Astute Class submarine from the Royal Navy in March and, in April, the fourth Astute boat, Audacious, was launched.
  • Secured a $542m (£417m) contract in January to provide 145 M777 ultra-lightweight howitzers to India.
  • The first two Typhoon aircraft for Oman arrived in the Sultanate of Oman in June.
  • Final four aircraft delivered on the Salam Typhoon programme.
  • Typhoon support contracts in Saudi Arabia meeting contractual requirements.
  • Secured further awards for APKWS™ laser-guided rockets worth $240m (£185m).
  • Following operational certification in February, the new San Diego dry dock accepted its first docking. The US ship repair business received orders of $511m (£393m) in the first half of 2017.
  • In February, the acquisition of IAP Research, Inc. was completed. This technology insertion enhances our position in advanced weapon systems, such as the electromagnetic railgun.
  • In June, selected as the preferred tenderer for the Jindalee Operational Radar Network upgrade programme in Australia.
  • In July, the UK High Court ruled that the UK government has been acting lawfully in granting defence export licences to the Kingdom of Saudi Arabia.

Guidance for 2017

In aggregate, we expect the Group’s underlying earnings per share for 2017 to be 5% to 10% higher than full-year underlying earnings per share in 2016 of 40.3p.
This outlook remains unchanged despite moving the US$ planning rate for the year from $1.25 to $1.28.
Whilst there is no change to the Group-level earnings guidance, some softening in the top line of, and an anticipated second-half restructuring charge in, Cyber & Intelligence (comprising the US Intelligence & Security sector and Applied Intelligence) are expected to be offset across the rest of the business. We expect the Applied Intelligence business to be close to an underlying break-even position by the year end excluding the anticipated restructuring charge.
In 2017, we continue to expect a small reduction in net debt compared with 31 December 2016.
This guidance is based on the measures used to monitor the underlying financial performance of the Group. 
View more information on our investors site
For more information, please contact:
Media Relations
Martin Cooper,
Investor Relations Director
Telephone: +44 (0)1252 383040
Rowan Pearman,
Director, Media Relations
Telephone: +44 (0)7721 107716
Issued by:
BAE Systems plc
Media hotline: + 44 (0) 7801 717739
Ref: 098/2016
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Martin Cooper
Investor Relations Director
Investor Relations Director


+44 (0)1252 383040

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Rowan Pearman
External & Strategic Comms Director


+44 (0) 7721 107716