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BAE Systems reported its best year for new orders in 2022 as Britain’s biggest defence contractor benefited from a surge in business from long-term programmes and forecast more to come as the war in Ukraine drags on.

The FTSE 100 group, which builds everything from Eurofighter Typhoon jets to nuclear submarines and combat vehicles, said it took in a record £37bn in new orders, propelling its order backlog to £58.9bn.

Charles Woodburn, BAE chief executive, said the company expected “continued momentum in the medium to long term as governments replenish stocks, recapitalise equipment and support allies”. 

BAE has seen its shares soar as western governments have pledged to increase military spending in the wake of Russia’s invasion of Ukraine. Its shares have risen 50 per cent over the past 12 months and closed at 901p on Wednesday in London.

The group, which generates a significant portion of its earnings in US dollars, also benefited from a strong dollar against the sterling. Sales to the end of December 2022 increased 9 per cent to £23.3bn on a reported basis. They were up 4.4 per cent on a constant currency basis, BAE’s preferred metric.

Underlying earnings before interest and tax rose 12 per cent to £2.5bn on a reported basis. They were up 5 per cent on a constant currency basis.

Free cash flow of £2bn exceeded analyst expectations. BAE said it would propose a 7.6 per cent increase in its final dividend to 27p.

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