FTSE 100 Round-Up: BAE Systems, Imperial Brands

FTSE 100 shares BAE Systems and Imperial Brands both issued market updates on Tuesday. Here are the key takeaways from their latest releases.

“Very Strong” Orders

BAE Systems’ share price rose 3.6% on Tuesday following news of healthy order volumes in the year to date.

The business secured £18 billion worth of orders in the first half of 2022. And it has received a further £10 billion worth since then.

The defence giant said that “we are tracking towards a very strong year of order intake.”

Cable Boost

BAE Systems said, too, that ongoing dollar strength could provide its top and bottom lines with a significant boost this year.

Based on an assumed average of $1.38 to £1, the FTSE 100 business said that sales would rise between 2% and 4% in 2022. Meanwhile underlying EBIT would increase between 4% and 6% year on year.

But if cable averages $1.23 to £1 this year BAE Systems expects sales to rise between 7% and 9%, and underlying EBIT growth of 10% to 12%.

More Progress Tipped For 2023

Charles Woodburn, chief executive at BAE Systems commented that “our large order backlog, diverse portfolio position and focus on programme performance position us well for another year of top line growth and margin expansion in 2023.”

He added that “we see sales growth coming from all sectors and opportunities to further enhance the medium-term outlook as our customers address the elevated threat environment.”

The company said that many of the countries it supplies hardware to have either increased military spending or are making plans to hike their arms budgets.

BAE Systems said that it continues to endure supply chain challenges, adding that these problems are especially prevalent in business areas reliant on microelectronics. However, it said that the recruitment market has improved since the halfway point of 2022.

Profits Sink On Russia Withdrawal

Imperial Brands’ share price remained broadly unchanged following the release of full-year financials. It was last 0.3% higher in Tuesday’s session.

The tobacco product maker saw net revenues fall 0.7% in the 12 months to September, to £32.6bn. Meanwhile pre-tax profit tanked 21% year on year to £2.6bn.

The FTSE 100 business was hit hard by its withdrawal from Russia following February’s invasion of Ukraine. And it warned that its exit will continue to hamper performance in the current financial year.

Volumes Slip

Tobacco volumes at Imperial Brands dropped 4.7% in financial 2022, it said, or 1.2% excluding Russia. However, the business — whose popular brands include Winston, Gauloises and West — grew market share in its UK, Spain and US markets in the period.

In the States its take of the cigarette market rose an impressive 90 basis points year on year, to 10.1%. This was the fourth successive year of market share growth.

Meanwhile, global sales of its next generation products (NGPs) jumped 11% thanks to market launches in all categories. Products here include its Pulze and iD heated tobacco sticks.

Flat Operating Profit Tipped For H1

Imperial Brands said that “performance will be weighted to the second half of the year due to the phasing of NGP investment, the impact of our exit from Russia in April 2022, and the continued unwind of Covid-19 that will all affect the first half.”

Consequently it expects first-half adjusted operating profit to be flat year on year at constant currencies.

Looking further ahead the firm expects to grow net revenues at constant currencies in a “low single-digit” range over the next three years. It also expects adjusted operating profit to rise at a compound annual growth rate of mid-single digits over the period.