On target: BAE said it expects earnings to rise by between 8% and 10% this year on sales up as much as 9%
The boss of Britain’s biggest defence company said Europe has finally turned its back on woke investing – but only after the invasion of Ukraine.
Unveiling bumper profits and record orders of close to £78billion, BAE Systems chief executive Charles Woodburn said investors who shunned defence stocks in the name of ‘ESG’ causes have ‘swung back to a more sensible position’.
He also said the munitions giant stands ready to ramp up production as nations increase defence spending to deal with ‘varied and complex threats’ from around the world.
But he added that governments must provide ‘enough clarity of what they want and when’ to help it meet demand.
The update came as pressure mounts on European countries to ramp up defence spending as Donald Trump’s plans for peace in Ukraine cause alarm around the world.
The US President has demanded that other Nato countries spend 5 per cent of gross domestic product (GDP) on defence – which would more than double military spending in the UK and other European nations.
War profits: BAE Systems chief executive Charles Woodburn said investors who shunned defence stocks in the name of ‘ESG’ causes have ‘swung back to a more sensible position’
That would further boost BAE, which makes everything from submarines and warships to fighter jets and missiles.
The rise of woke ESG investing – which focused on environment, social and governance issues – saw industries such as defence, Big Oil and tobacco fall out of favour in recent years.
But Woodburn said investors once again accept defence is a key ‘foundation’ of democracy, helping the pendulum swing back the other way.
‘Sadly, it took a war in Europe to realise that,’ he added.
BAE – which is involved in manufacturing the F-35 fighter jet and is leading the Dreadnought submarine project for the UK’s nuclear deterrent programme – revealed it secured £33.7billion of orders last year.
That took its orders on its books to a record £77.8billion.
Annual profits soared 14 per cent to a high of £3billion after sales also climbed 14 per cent to £28.3billion.
The defence giant said it expects earnings to rise by between 8 per cent and 10 per cent this year on sales up as much as 9 per cent.
BAE shares edged up another 0.6 per cent, taking gains since the start of 2022 before the invasion of Ukraine to nearly 150 per cent.
Woodburn said the company is waiting for confirmation of the new spending requirements for Nato allies.
He said the defence industry can ‘respond [to demand] if we get enough clarity of what they want and when’.
In the UK, BAE is keen for the outcome of Labour’s defence review, which is due to be published this spring.
He said: ‘[Military spending] will increase, but to what extent?’
It now stands at 2.3 per cent of GDP. Woodburn added: ‘Threat is trending upwards. Defence spending will be higher than where it is today.’
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