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BAE Systems share price: Group shortlisted to build new UK warship design

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The UK government has shortlisted BAE Systems (LON:BA) as one of the three groups to develop designs for the country’s newest warship, Bloomberg has reported. The news marks a boost for the FTSE 100 company after last week, UBS lowered its rating on the group, arguing that  the grim UK economic outlook will inevitably impact the government's defence spending.

BAE Systems’ share price has surged in London in today’s session, having gained 1.13 percent to 454.70p as of 09:29 GMT. The stock is outperforming the broader UK market, with the benchmark FTSE 100 index having slipped into the red and currently standing 0.42 percent lower at 6,749.45 points.

BAE shortlisted for UK warship design

Bloomberg reported this morning that the UK government had shortlisted three groups to develop designs for its newest warship. The British defence giant has presented a design with commercial shipbuilder Cammell Laird. The other groups in the running include Babcock, which is bidding in a consortium with France’s Thales, and the UK unit of Germany’s Atlas Elektronik.

The newswire quoted the Ministry of Defence as saying that the ultimate contract to build five Type 31e frigates is valued at £1.25 billion, with each consortium receiving £5 million to further develop each design.

Bidder to be chosen by end of 2019

Bloomberg further reported that the ministry had said that the preferred bidder to manufacture the ships will be chosen by the end of next year, with the first delivery scheduled for 2023.

BAE Systems updated investors on its performance last month, saying that  its outlook for the current year remained unchanged, with the company continuing to expect  underlying earnings per share for 2018 to be in line with the full-year underlying earnings per share for 2017, with some small additional benefit from exchange translation.

As of 09:49 GMT, Monday, 10 December, BAE Systems plc share price is 456.00p.

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