BAE Systems slightly raises earnings forecast

FILE PHOTO: Trade visitors walk past an advertisement for BAE Systems at Farnborough International Airshow in Farnborough, Britain, July 17, 2018. REUTERS/Toby Melville

LONDON (Reuters) - British defence company BAE Systems BAES.L slightly raised its profit forecast, saying demand for its capabilities remained high and orders for military kit this year, including Germany's plan to purchase new Typhoon jets, had exceeded expectations.

For 2020, BAE had previously forecast underlying earnings per share to be a mid-single digit percentage lower than last year’s result of 45.8 pence, but said on Wednesday they would now be “slightly higher than previously guided”.

A good operational performance at its factories, where it makes Typhoon fighters, combat vehicles and warfare ships, and an expected lower tax rate would offset a negative foreign exchange impact, the company said.

BAE Systems said it expected growth to continue under the next administration in the U.S., its biggest market, accounting for over 40% of sales and where it recently expanded with two acquisitions.

In the UK, its second biggest market, it said the outlook was stable as a government review into defence and security was ongoing. Its limited exposure to UK-EU trading meant the impact of the end of the Brexit transition period on the group would also be limited.

BAE, which alongside partners helps build Typhoon, will also benefit from the recently confirmed approval by Germany’s parliament for the country to buy 38 of the aircraft.

Reporting by Sarah Young, Editing by Paul Sandle