BAE Systems plc

Summary

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Cyber & Intelligence, Platforms & Services (US), Air, and Maritime. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance systems, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to defend against national-scale threats, protect their networks, and data against attacks; security and intelligence solutions to the United Kingdom government and allied international governments; anti-fraud and regulatory compliance solutions; and enterprise-level data and digital services. The Platforms & Services (US) segment manufactures combat vehicles, weapons, and munitions, as well as provides ship repair services and the management of government-owned munitions facilities. The Air segment develops, manufactures, upgrades, and supports combat and jet trainer aircraft. The Maritime segment designs, manufactures, and supports surface ships, submarines, torpedoes, radars, and command and combat systems; and supplies naval gun systems. It also supplies naval weapon systems, missile launchers, and precision munitions. The company was founded in 1970 and is based in Farnborough, the United Kingdom.

Market

Total Addressable Market:

Here, the total addressable market (TAM) is the global defence market which is valued at $2.24 trillion based on worldwide military expenditure figures for 2022.

Serviceable Available Market:

Here, the serviceable available market (SAM) is the defence market in select geographical regions (shown in map) accessible to the company which is valued at $1.37 trillion based on the respective 2022 military expenditure figures.

Serviceable Obtainable Market:

Here, the serviceable obtainable market (SOM) is the defence market in select geographical regions (shown in map) accessible to the company which is valued at $1.28 trillion according to the 2022 BAE Systems Annual Report.

Region Accessible:

USA

UK

Map showing Global Presence of BAE Systems.

Kingdom of Saudi Arabia

Australia

India

France

Germany

South Korea

Japan

Italy

Largest Region:

USA

Market Drivers:

-         Invasion of Ukraine and tensions in East Asia drive increased spending.

-         Increased spending by Japan in response to perceived growing threats from China, North Korea and Russia.

-         Aids and grants to Ukraine

Market Trends:

-         Unmanned combat vehicles

-         Autonomous fighter jets

-         Edge computing

-         3D printed technology

-         Use of AI in defence equipment

Competition

Competitive Advantages:

• World class defence capabilities across multiple domains - air, land, sea and undersea
• Strong customer relationships - largest defence supplier in the UK and Australia, and among top ten in the US
• Diversified Business Portfolio - wide range of mission critical electronic systems including electronic warfare systems, flight and engine controls, night vision systems, surveillance and reconnaissance sensors, and power and energy management system.

Competitors:

Company Name	HQ	Founding Year	No. of Employees	Revenue (FY 2022)	Market Cap.
BAE Systems	Farnborough, United Kingdom	1999	93000	$26.3B	$29.6B
Lockheed Martin Corporation	Bethesda, Maryland, United States	1995	116000	$66.0B	$113.3B
Northrop Grumman Corp	Falls Church, Virginia, United States	1994	95000	$36.6B	$65.3B
General Dynamics	Reston, Virginia, United States	1952	106500	$39.4B	$61.3B
The Boeing Company	Arlington, Virginia, United States	1916	156000	$66.6B	$136.5B
RTX (Raytheon)	Arlington County, Virginia, United States	1922	182000	$67.1B	$125.4B