The UK defence prime raised its guidance across the board and boasted a bumper order book.
BAE Systems raised its 2026 full-year guidance after a strong first half, with sales up 9% to £15.8 billion and underlying operating profit up 11% to £1.7 billion, supported by rising defence spending in Europe and continued demand from its major US and Saudi Arabian markets.
Order intake reached £16.4 billion, pushing the group’s backlog to a record £84 billion — up only modestly from the £83.6 billion record reported at the end of 2025, as strong sales growth partly offset another six months of order intake outpacing revenue. European orders totalled £4.8 billion in the half, accounting for 30% of new orders and one third of the group’s total backlog, reflecting growing demand for munitions, combat vehicles, submarines, naval ships and combat air programmes across the region.
BAE raised its guidance for sales, underlying operating profit and earnings per share, while increasing its free cash flow target by around £700 million to more than £2 billion for the year. The company returned £933 million to shareholders through dividends and share buybacks during the half, up 10% on the prior year, and declared an interim dividend of 15 pence per share.
Shares fell more than 8% on the day of the announcement despite the upgraded outlook, suggesting investors had anticipated an even stronger set of results.
Chief Executive Charles Woodburn pointed to new capabilities as evidence of the company’s momentum, citing its new collaborative combat aircraft — “designed to enable our customers to deploy a combined future force of crewed and uncrewed fighter jets” — alongside investment in US facilities to quadruple production of critical munitions.
The results reinforce a broader trend across Europe’s defence industry, with higher government spending translating into stronger order books and improved earnings for major contractors.
