Profits boost for defence firms as governments beef up spending
Summary
Rolls-Royce and BAE Systems both expect higher profits because many governments are spending more on defense. This rise in spending is helping Rolls-Royce sell more jet engines and power systems, and BAE Systems is getting bigger orders for weapons and military equipment.Key Facts
- Rolls-Royce raised its forecast for operating profit to £4.7bn-£4.9bn, up from £4bn-£4.2bn.
- Rolls-Royce also increased its free cashflow forecast to £3.8bn-£4bn.
- Higher defense spending since Russia’s invasion of Ukraine is a big factor in Rolls-Royce’s growth.
- Rolls-Royce benefits from military projects like Saab GlobalEye and MQ-4C Triton, both using its engines.
- BAE Systems raised its profit forecast to a 10%-12% rise, up from 9%-11% previously.
- BAE makes tanks, fighter jets, and weapons for the UK and sells to the US, Gulf countries, and Turkey.
- BAE has a £5.9bn UK contract to build the HMS Dreadnought nuclear submarine.
- Both companies see steady growth due to increased government military budgets worldwide.
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