First-half 2026 results unpicked: order book heaven

The first-half results are now in for Europe’s biggest defence and aerospace companies and the continent’s rearmament push is creating enormous order backlogs.

Orders surged at Airbus, Leonardo, Hensoldt and Rheinmetall. BAE Systems closed the half with a record £84 billion backlog — the largest of any company in this group, worth almost €100 billion. Meanwhile Safran raised its full-year guidance on the back of both civil and military demand. Even Airbus, whose €33.2 billion in first-half total group revenue dwarfs every other number in this piece, found its fastest growth within its defence division. The strength isn’t just with the pure play defence giants, but at those civil aerospace giants as well.

Momentum across the defence spectrum

Some of of the clearest evidence to date of the penetration of this surging defence demand came from Hensoldt, the German sensor and radar specialist whose H1 orders doubled. Hensoldt sits at a slightly different point on the supply chain than firms like BAE Systems; it doesn’t build the tank or the jet but the builds the parts that let the crew see, aim and survive inside them.

Hensoldt’s Optronics order intake – the sensors that combine optics and electronics, so thermal imagers, night sights and the like – went from €164 million to €971 million in six months, driven by contracts to fit Germany’s Puma and Schakal armoured vehicles with digital sighting systems.

Growth inside the civil aerospace giants

The same round of strong results in the defence divisions of the civil aviation giants suggests the spending boom is broadening in its reach, albeit these businesses benefit from enormous presence in their home markets, and dare I say it… mighty lobbying machines in Brussels and European capitals.

At Safran, the defence business is a small component in comparison to its civil jet engine operations, but it reported organic revenue growth of 14%. Airbus told a similar story at much greater scale: Defence and Space order intake reached €9.3 billion, up a whopping 83% from €5.1 billion a year earlier, while the division’s revenue grew a comparatively modest 9% to €6.3 billion.

While both Airbus and Safran have run defence businesses for decades, the scale of the order and revenue growth is fairly astonishing. Airbus’ growth in the Defence and Space department was up 83%.

Buying (a bit more) locally

A third development we’ve observed is that Europe is buying European, rather than relying on the rich export markets of the Gulf states that have historically kept its defence primes order books glutted.

BAE Systems is the clearest case. It recorded £16.4 billion of orders in the first half, up from £13.2 billion a year earlier, closing June with that record £84 billion backlog. Within that, its Platforms & Services division – the unit that includes its Swedish subsidiaries Bofors and Hägglunds, which build artillery and armoured vehicles respectively – grew sales by nearly 30%, and BAE’s said the sales were European, not to the US or Gulf markets that have traditionally dominated its order book. BAE is putting more than $300 million into Hägglunds in Sweden over five years to increase production capacity as demand for combat vehicles rises across Europe.”

Rheinmetall revisions

Rheinmetall, the poster child of Europe’s defence rally over the past two years, published full results that offered the strongest evidence yet of how big this cycle has become: first-half sales rose 39% to €5.23 billion, operating profit jumped 74% to €786 million, and the backlog reached €80.5 billion after €16.2 billion of new orders in the half.

But the company still trimmed its 2026 sales guidance by €300 million — a relatively small adjustment against its €5.27 H1 sales and €16.2 billion of H1 orders.

But the company still trimmed its 2026 sales guidance by €300 million (comparatively minuscule against the €16.2 billion of H1 sales) after Germany cancelled the F126 frigate programme – the same cancellation that separately hit Hensoldt’s order book by more than €200 million. Germany appears to be steering that naval budget toward a rival design instead, with Kiel headquartered shipbuilder TKMS winning the replacement F128 competition.

Rheinmetall held its full-year margin target at around 19%, and the guidance cut is genuinely small. Nonetheless, it’s a reminder that amid huge spending increases, the industry is still at the mercy of flip-flopping governments.

Buying new capacity and capability

The conversation has moved well beyond whether demand exists, and questions now arise around whether the industry can actually produce everything it has now logged in its order books.

BAE is pouring money into its US munitions facilities to help quadruple production, Hägglunds is trying to lift combat-vehicle output by 400% within two years and Hensoldt’s order book has swelled far faster than its recent revenue, showing the scale of the production ramp it now has to execute.

That capacity squeeze is undoubtably one factor pushing companies towards buying ready-made capability rather than building it out organically. Leonardo’s purchase of Iveco Defence Vehicles (completed in March) added a substantial land systems business to the Italian prime, including roughly €6 billion to its order backlog and more than 2,000 employees.

Leonardo were not the only ones out shopping this season either. Hensoldt bought Dutch optics specialist Nedinsco, BAE picked up Swedish precision-parts maker Aston Harald, and Rheinmetall acquired naval contractor NVL.

In France, Dassault are an interesting case when it comes to capacity and the ability to deliver orders. While the Rafale maker posted a first-half order intake drop of 64%, to about €2.9 billion, that’s comparing it to a huge €6.9 billion worth of export contracts in the first six months of 2025. Its deliveries this year pushed sales up 46% to €4.2 billion, with export Rafales alone accounting for just over half of that. Furthermore, the company kept its full-year guidance unchanged and has a formal Indian request for 114 more Rafales on the table, which would be its largest export order ever. It’s an interesting case showing how different companies are experiencing the boom in different way.

The next test – can they deliver, quite literally

So, where does that leave us?

The results confirmed that demand is stronger than these companies have seen in years, the orders continue to stretch deeply into the wider defence ecosystem, and European governments are big buyers. This is hardly breaking news though.

There remain two risks to this fairly logical playing out of a defence boom.

Firstly, can Europe’s defence tech manufacturing ecosystem keep up with the rearmament pace governments have set. We should see early signs of this in the coming months. Ukraine will be an interesting case study of ramping up ‘traditional’ munitions hardware now that the UK and France have agreed to share the Shadow Storm cruise missiles blueprints with it.

The second risk is the multi-billion euro question – will the defence systems and platforms ordered today still be judged as critical in two or three years’ time, let alone five or ten? Or will the VC-backed startups – the kind of software-native challengers raising hundreds of millions this year from deep institutional pockets and feverishly trying to rewrite the economics of drone warfare, autonomy and electronic systems – have already changed what ‘capability’ means, and where priorities lie? The need for complex assets such as anti-air missiles, aircrafts, tanks and submarines will remain, but the priorities of military preparedness may shift. Can the defence primes of Europe keep pace?