LONDON, July 30, 2026 (GLOBE NEWSWIRE) -- Charles Woodburn, Chief Executive, said "Across the business, our outstanding teams have delivered another strong period of operational and financial performance, which gives us the confidence to upgrade our full year guidance.
"Alongside our focus on meeting our customers' needs today, we continue to invest in our business to accelerate innovation, drive efficiencies and boost capacity, so we can get mission-critical capabilities into the hands of those who need them, faster. Examples include our new collaborative combat aircraft, designed to enable our customers to deploy a combined future force of crewed and uncrewed fighter jets, and investment in our facilities in Texas and New Hampshire to support the US Government's ambition to quadruple production of critical munitions.
"The global threat picture remains highly volatile and governments are responding with sustained increases in their defence budgets. The combination of our proven execution, diverse geographic footprint and continued investment in our technology and facilities, alongside our healthy order backlog and growing opportunities across our markets, positions us to keep delivering long-term growth."
Financial highlights
Financial performance measures as defined by the Six months ended 30 Six months ended 30 Group(1) June 2026 June 2025 Variance(2) Sales GBP15,772m GBP14,621m +9% Underlying earnings before interest and tax $(EBIT)$ GBP1,701m GBP1,550m +11% Underlying earnings per share (EPS) - basic 38.9p 34.7p +13% Free cash flow GBP1,791m GBP(368)m GBP2,159m Order intake GBP16.4bn GBP13.2bn GBP3.2bn -------------------- -------------------- --------------------- ----------- As at 31 December As at 30 June 2026 2025 Variance -------------------- -------------------- --------------------- ----------- Order backlog GBP84.0bn GBP83.6bn GBP0.4bn -------------------- -------------------- --------------------- ----------- Financial performance measures as derived from Six months ended 30 Six months ended 30 IFRS June 2026 June 2025 Variance(2) -------------------- -------------------- --------------------- ----------- Revenue GBP14,615m GBP13,571m +8% Operating profit GBP1,504m GBP1,327m +13% EPS - basic 34.1p 32.3p +6% Net cash flow from operating activities GBP2,243m GBP74m GBP2,169m Dividend per share 15.0p 13.5p +11% -------------------- -------------------- --------------------- ----------- As at 30 June 2026 As at 31 December 2025 Variance -------------------- ------------------------------------------ ----------- Order book GBP62.7bn GBP63.1bn GBP(0.4)bn -------------------- -------------------- --------------------- -----------
As defined by the Group
-- Sales increased 9%2, with all sectors contributing growth in the period.
-- Underlying EBIT was up 11%2, increasing the Group's return on sales for
the period to 10.8% (2025 10.6%).
-- Underlying EPS increased 13%2 to 38.9p, after accounting for the Group's
underlying net finance costs and tax.
-- Free cash inflow of GBP1,791m reflected a high level of customer
advances. No material advances were received in the comparative period.
-- Order intake of GBP16.4bn remained high across all sectors and we closed
the period with a record order backlog of GBP84.0bn.
As derived from IFRS
-- The reported growth in revenue of 8%2 reflected the same strong
operational performance across the portfolio excluding the impact of our
equity accounted investments.
-- Operating profit increased 13%2 as the Group incurred lower costs in
relation to amortisation of acquired intangibles and adjusting items
which are excluded from Underlying EBIT.
-- Basic EPS was up 6%2 to 34.1p after accounting for the Group's net
finance costs and tax, with both higher finance costs and effective tax
rate contributing to the reduction in growth compared to operating
profit.
-- Net cash flow from operating activities is also inclusive of movements in
customer advances in the period, as well as timing of other working
capital requirements.
1. We monitor the underlying financial performance of the Group using
alternative performance measures (APMs). These measures are not
defined in International Financial Reporting Standards (IFRS) and
therefore are considered to be non-GAAP (Generally Accepted
Accounting Principles) measures. The relevant IFRS measures are
presented where appropriate. The purposes and definitions of
non-GAAP measures are provided in the Alternative performance
measures section on page 38.
2. Growth rates for sales, underlying EBIT and underlying EPS are on
a constant currency basis (i.e. calculated by translating the
results from entities in functional currencies other than pounds
sterling for the period ended 30 June 2025 to pounds sterling at
the average exchange rate of such currencies for the period ended
30 June 2026). The comparatives have not been restated. All other
growth rates and year-on-year movements are on a reported currency
basis.
Delivering for our customers
Our focus on operational performance and contracting discipline enables us to consistently deliver critical capabilities and technologies for our customers. Our products and services remain in high demand and, in the first half of the year, we secured GBP16.4bn of orders while making good progress executing on our major long-term programmes.
Highlights since the beginning of the year included:
-- Securing a contract from the UK Government to provide the Republic of
Türkiye with training, support equipment and services to its 20
Typhoon aircraft ordered in October 2025. Manufacturing is already
underway in the UK and across the Eurofighter partner nations, with first
delivery scheduled for 2030.
-- Successful APKWS$(R)$ precision weapon test firing from a Eurofighter
Typhoon, demonstrating an effective, affordable counter-drone solution.
In rapid collaboration with the UK Royal Air Force (RAF), the system was
moved from testing to operational deployment in the Middle East in under
two months, significantly enhancing the RAF's ability to counter emerging
threats in the region.
-- Unveiling Brontanax$(TM)$ at the Farnborough International Airshow in July,
which will be the UK's first uncrewed autonomous Collaborative Combat
Aircraft $(CCA)$. The first-of-its class CCA, designed and built by
engineers at our Warton site in the UK, is intended to provide electronic
warfare and precision strike capabilities against airborne and ground
targets.
-- Edgewing secured its first international contracts for the Global Combat
Air Programme $(GCAP)$ with a combined value in excess of GBP5bn. This will
enable completion of the advanced concept and assessment phase of the
programme, together with further joint detailed design and development.
-- Signing a landmark seven-year framework agreement with the US Department
of War (DoW) to quadruple production and accelerate delivery of the
infrared seeker for the Terminal High Altitude Area Defense (THAAD)
interceptor missile in support of the DoW's Acquisition Transformation
Strategy.
-- Securing an additional award for M109A7 Paladin Self-Propelled Howitzer
sets valued at $535m (GBP398m), building on the multi-year US Army
contracts awarded in 2025 and providing advanced firepower and
manoeuvrability to enable artillery units to rapidly deploy and engage
targets with precision.
-- Receiving a contract valued at over $200m (GBP149m) for ARCHER artillery
systems and securing a $180m (GBP134m) contract for TRIDON Mk2
anti-aircraft and counter-UAS systems, both produced by our Bofors
business in Sweden.
-- Completing the Preliminary Design Review for the $1.2bn (GBP0.9bn) Epoch
2 missile warning and tracking satellite programme less than nine months
from the US Space Force contract award, whilst also receiving incremental
funding of $373m (GBP277m) in the first half.
-- Supporting the A$2.5bn (GBP1.3bn) export agreement of Australia's High
Frequency Surveillance capability system to establish an Arctic Over the
Horizon Radar (A-OTHR) in Canada. The agreement, which is effective from
1 July 2026, will be Australia's largest ever defence export.
-- Securing a new GBP5.9bn contract to fund critical work to progress the
UK's Dreadnought Class nuclear deterrent submarines, which the Secretary
of State for Defence will announce at our Barrow-in-Furness site in July.
Investing to support future growth
We continue to invest in our business to drive innovation, enhance efficiency and boost capacity, as we deliver on our programmes and rise to the emerging threats our government customers are facing:
-- We continued to develop our drone and counter-drone portfolio to deliver
additional frontline capabilities for our customers. The British Army and
Royal Navy trialled our one-way effector, Nyan, and we plan to conduct
initial trials of our BAE Systems Anti Threat System, using smart
software, electronic warfare and kinetic measures to tackle drone threats
in August.
-- We completed the acquisition of Aston Harald Mekaniska Verkstad AB, a
Swedish provider of precision machined, large, complex structures for
aerospace, defence and commercial products, helping to enhance security
of supply to our Bofors artillery business as it ramps up production
capacity and delivery capability.
-- We remain committed to ramping up our production capacity at our
Hägglunds facility in Sweden and are on track to invest more than
$300m (GBP223m) over a five-year period. Investments include building a
new logistics centre and integration and inspection facility, as we
continue to accelerate production to meet the rising demand for combat
vehicles across Europe.
-- We opened a new facility in Utah, US, which will serve as an extension of
our presence in the area supporting Intercontinental Ballistic Missile
sustainment and modernisation efforts, providing a state-of-the-art
workspace for engineering, digital transformation and mission operations
teams.
-- We completed our 150,000 sq-ft expansion of our state-of-the-art Endicott
campus in New York and announced a further $135m (GBP100m) investment for
facility enhancements in Austin, Texas, and Hudson, New Hampshire, to
boost our precision-guided munitions production capacity.
-- We made good progress towards our target to recruit more than 1,100
apprentices and around 1,200 graduates and undergraduates in the UK by
the end of 2026.
-- We launched a new technology incubator programme, Launchpad, which aims
to move defence technologies beyond prototype development by funding
early-stage ventures or spinning them out into independent businesses.
During the period, we created a start-up business focused on ultrasound
technology enabling wireless transmission of data and power through solid
barriers and committed EUR50m (GBP43m) to venture capital funds backing
European defence-tech start-ups.
Capital distributions
-- In the first six months of the year, we returned GBP933m to shareholders
through dividends and our share buyback programme, a 10% increase
compared to the GBP849m returned in the first half of 2025.
-- The Board has declared an interim dividend of 15.0p in respect of the
first six months of the year, which will be paid on 2 December 2026.
2026 Upgraded Group guidance(1)
Given the strong operational performance in the first half, we are upgrading guidance across all key financial performance measures for the full year, as shown in the table below. Our cumulative three-year free cash flow guidance for 2024 to 2026 has also been upgraded while the cumulative three-year free cash flow guidance for 2025 to 2027 and 2026 to 2028 remains unchanged.
Guidance is provided on a constant currency basis using an exchange rate of $1.32:GBP1, which is in line with the actual 2025 exchange rate.
Year ended 31 Updated guidance Previous guidance Year ended 31
December 2026 December 2025
Results
------------------
Sales Increase in the Increase in the GBP30,662m
range of 8% to range of 7% to 9%
10%
------------------ ------------------ ------------------ ------------------
Underlying EBIT Increase in the Increase in the GBP3,322m
range of 10% to range of 9% to
12% 11%
------------------ ------------------ ------------------ ------------------
Underlying EPS Increase in the Increase in the 75.2p
range of 11% to range of 9% to
13% 11%
------------------ ------------------ ------------------ ------------------
Free cash flow >GBP2.0bn >GBP1.3bn GBP2,158m
target
------------------ ------------------ ------------------ ------------------
2024 to 2026 >GBP6.7bn >GBP6.0bn
cumulative free
cash flow
------------------ ------------------ ------------------ ------------------
-- Underlying net finance costs c.GBP340m (previously c.GBP370m)
-- Effective tax rate c.22%
-- Non-controlling interests c.GBP80m
Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the GBP/$ exchange rate will impact sales by c.GBP500m, underlying EBIT by c.GBP70m and underlying EPS by c.1.4p.
1. Whilst the Group is subject to geopolitical and other uncertainties, the
Group guidance is provided on current expected operational performance.
The guidance is based on the measures used to monitor the underlying
financial performance of the Group. Reconciliations from these measures
to the financial performance measures defined in IFRS are provided in the
Alternative performance measures section on page 38.
For further information please contact:
Investor Relations Media Relations Paul Checketts Kristina Anderson Telephone: +44 (0) 3300 466802 Telephone: +44 (0) 7540 628673 Email: investors@baesystems.com Email: kristina.anderson@baesystems.com ------------------------------- ---------------------------------------
Analyst and investor presentation
A presentation, for analysts and investors, of the Group's half year results for 2026 will be available via webcast at 08.00am BST today (30 July 2026).
Details can be found on investors.baesystems.com, together with presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day.
About BAE Systems
We are a workforce of 112,400(1) highly skilled people in more than 40 countries. Working with our customers and local partners, we develop, engineer, manufacture and support products and systems that deliver military capability, protect national security and keep critical information and infrastructure secure.
1. As at 30 June 2026 and including share of equity accounted investments.
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Issued by:
BAE Systems plc
Media hotline: +44 (0) 7801 717 739
www.baesystems.com
@BAESystemsplc
Ref: 090/2026
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