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BAE Systems said the likelihood of higher spending on defence in a number of its key markets was “improving”, as the defence group attributed most of its 2017 increase in revenues to favourable currency movements.

After launching a restructuring in October that cut almost 2,000 UK jobs in its aerospace and maritime divisions in response to a lack of fighter jet orders and rising competition, chief executive Charles Woodburn said the group started 2018 “with a streamlined organisation and a strong focus on programme execution, technology and enhanced competitiveness”.

Revenues increased by £500m to £18.3bn in the year to December, “largely reflecting currency translation”, the industrial group said.

Underlying earnings per share, the group’s preferred measure of performance, rose 8 per cent year-on-year to 43.5p a share. That was in-line with management’s target of between 5 per cent and 10 per cent annual growth for the year, but for 2018 BAE said it expected the measure to be “in line” with full-year earnings for the last financial year rather than increasing still further.

In 2017, earnings were boosted by BAE’s US-based electronic systems business which received over £330m worth of orders linked to the F-35 fighter plane and by its “advanced precision kill weapon system laser-guided rockets”, with nearly £222m of orders during the year and 13,000 units delivered.

Most of the sales growth in 2018 was likely to be driven by the electronic systems and its platforms and services business which supplies US combat vehicles and weapons systems, the company said.

Aerospace sales are likely to sink further as projects to build Typhoon craft for Europe, Saudi Arabia and Oman come to an end, and the maritime division should hold steady as work on aircraft carriers tails off, but submarine programmes ramp up.

Operating profits took a substantial hit from a chunky £384m non-cash goodwill impairment in the applied intelligence cyber security division — which delivers “national security solutions” for the British and international governments — dropping almost 18 per cent to £1.5bn.

BAE said it had cut its expectations of the unit’s future growth products and restructured the lossmaking business, taking a £24m restructuring charge and slowing the pace of underlying losses in the second half of the year.

Pre-tax profits also slipped, by around 1.5 per cent to £1.13bn.

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