Defence and aerospace group BAE Systems has reported a 22% rise in underlying profit to £1.48 billion for 2007.

The gains were driven by five months of trading from US acquisition Armor Holdings – which is a major manufacturer of military vehicles and body armour - and strong trading across all the company's business segments.

Full-year sales were up 14% to £15.71 billion, helping annual profit to come in slightly ahead of market expectations.

'We have excellent forward visibility and a further year of good growth is anticipated in 2008, including a full year contribution from the former Armor Holdings business,' the group commented.

BAE said it was seeing continued growth from its US businesses, with particularly strong demand for sophisticated electronic warfare and protection systems.

The acquisition of Armor Holdings has delivered further progress to BAE's wheeled vehicle strategy, with the group saying the Armor acquisition is 'well on track to deliver our required return on investment.'