BAE Systems (BA) H2 2024 earnings summary

Executive summary

• Achieved strong top-line and earnings growth in 2024, with sales and profitability at the top end of guidance and record order intake and cash flow exceeding expectations.

• Portfolio increasingly focused on high-growth, technology-driven domains such as space, drones, counter-drones, and electronic warfare.

• Record order backlog of GBP 78 billion provides high visibility for future sales and underpins confidence in medium-term growth.

• Strategic collaborations advanced, including AUKUS and GCAP, and major acquisitions like Ball Aerospace completed.

• Significant strategic progress on major programmes and portfolio reshaping.

Financial highlights

• 2024 sales reached a record GBP 28.3 billion, up 14% year-over-year; organic growth was 9%.

• Underlying EBIT grew 14% to GBP 3.15 billion, with return on sales at 10.6%.

• Free cash flow was GBP 2.5 billion, net of GBP 1 billion CapEx; operating cash flow was GBP 3.1 billion.

• Proposed final dividend of GBP 20.60 per share, total dividend up 10% to GBP 0.33, marking over 20 years of consecutive growth.

• Net debt increased to GBP 4.95 billion, reflecting acquisitions and capital returns.

Outlook and guidance

• Expecting 7%-9% top-line growth and continued margin expansion in 2025.

• EPS projected to grow 8%-10%, in line with EBIT.

• Free cash flow guidance for 2025 set to exceed GBP 1.1 billion, with average annual cash flow over 2024-2025 above GBP 1.8 billion.

• Upgraded three-year cash flow target to exceed GBP 6 billion for 2023-2025.

• Segment guidance: all major segments forecasted for sales and margin growth in 2025.