BAE Systems (BA) investor relations material

Executive summary

• Achieved strong operational and financial performance in H1 2025, with double-digit growth in sales, EBIT, and EPS, leading to upgraded full-year guidance.

• Order intake reached £13.2bn, with a contract backlog of £75bn, providing exceptional visibility and supporting medium-term growth.

• Well positioned in major defense markets, benefiting from increased global defense spending and a robust pipeline of new business opportunities.

• Continued significant investment in R&D, technology, and innovation, particularly in drones and counter-drone capabilities.

• Returned £849m to shareholders through dividends and share buybacks, reflecting disciplined capital allocation.

Financial highlights

• Sales increased by 11% year-over-year to £14.6bn, with all sectors contributing to growth.

• Underlying EBIT rose 13% to £1.55bn, with margin improvement to 10.6%.

• Underlying EPS up 12% to 34.7p; interim dividend increased by 9% to 13.5p.

• Free cash outflow of £368m in H1, as expected, due to advance payments to the supply chain.

• Net debt increased to £5,566m from £4,945m at year-end 2024, reflecting cash outflow and shareholder returns.

Outlook and guidance

• Upgraded 2025 guidance: sales growth of 8–10%, underlying EBIT up 9–11%, and EPS up 8–10%.

• Free cash flow for 2025 expected to exceed £1.1bn; three-year free cash flow guidance remains at £5–6bn.

• EPS growth guidance maintained at 8–10% due to higher share price reducing buybacks and a higher tax rate.

• Effective tax rate expected at 20%; underlying finance costs around £400m.

• Sensitivity to FX: 5 cent movement in £/$ impacts sales by ~£525m, EBIT by ~£75m, EPS by ~1.4p.