Profit after tax rallied 21 percent to pound1.0 billion ($1.3 billion, 1.2 billion euros) in 2018 compared with a year earlier.

The group's earnings performance improved partly due to a lack of exceptional charges -- but it cautioned over geopolitical turmoil.

Turnover meanwhile was steady at pound18.4 billion.

"The group made good progress in strengthening the outlook and geographic base of the business, with a number of significant contract wins," said CEO Charles Woodburn.

"Delivering a strong operational performance and continued investment will enable us to meet our growth expectations and underpin the long term."

BAE's share price however fell 5.7 percent to 475.60 pence in early deals on London's benchmark FTSE 100 index, which was 0.7 lower overall.

"On the surface, BAE Systems was feeling positive," said Spreadex analyst Connor Campbell.

"However, it undermined all that by reminding investors it is 'subject to geopolitical uncertainties', the kind that could scupper its forecasts."

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BAE SYSTEMS