The company posted half year earnings before interest, tax and amortisation (EBITA) of 802 million pounds, compared to a consensus forecast of just under 800 million.

BAE warned in February that earnings would fall by 5 to 10 percent this year from the 1.9 billion pound level in 2013, due to U.S. spending cuts and the non-recurring benefit from the settlement of the Salam deal with Saudi Arabia.

"Excluding the impact of exchange translation, the Group remains on track to deliver earnings in line with our expectations for the full year," said Chief Executive Ian King.

The pound has gained over 3 percent over the past six months against a trade-weighted basket of currencies <=GBP>, a factor which has dragged on the performance of a number of companies based in Britain.

BAE said that at an average $1.70 exchange rate, its earnings per share would be impacted by about one pence per share.

The company added that sales were anticipated to be weighted towards the second half of 2014. It was finalising 1.3 billion pounds of international orders and was in the advanced stages of negotiations on 1 billion pounds worth of UK naval contracts.

The company, which is involved in projects from the Eurofighter Typhoon jet and in the building of two new aircraft carriers for Britain, also increased its dividend by about 2 percent to 8.2 pence per share.

(Reporting by Sarah Young; editing by Keith Weir)