BAE Systems (BA) H1 2026 earnings summary

Executive summary

• Delivered strong operational and financial results in H1 2026, with 9% sales growth, 11% EBIT growth, 13% EPS growth, and a record order backlog of £84bn, leading to upgraded full-year guidance.

• Geographic, domain, and product mix position the business well for global defense needs and long-term growth amid rising global defense spending.

• Excellent visibility of long-term growth supported by a substantial pipeline and backlog.

• Continued investment in innovation, capacity, and efficiency, including major facility expansions and new technology initiatives.

Financial highlights

• Sales up 9% year-over-year to nearly £15.8bn, with all sectors contributing to growth.

• Underlying EBIT grew 11% to £1,701m; return on sales at 10.8%.

• Underlying EPS increased 13% to 38.9p.

• Free cash flow was £1,791m, a significant improvement from a negative £368m in the prior year, driven by customer advances.

• Net debt reduced to £3,173m from £3,844m at year-end 2025.

• Dividend per share increased to 15.0p, up 11%.

Outlook and guidance

• Upgraded 2026 guidance: sales growth of 8–10%, EBIT growth 10–12%, EPS growth 11–13%, and free cash flow above £2bn.

• Three-year free cash flow guidance (2024–26) raised to over £6.7bn.

• Long-term pipeline valued at £180bn, with backlog of £84bn providing strong visibility.

• Effective tax rate expected at ~22%; net finance costs guided at ~£340m.