BAE Systems (BA) H2 2025 earnings summary

Executive summary

• Achieved strong operational and financial results in 2025, with double-digit growth in sales, EBIT, and EPS, and record order intake and backlog, supported by high cash generation and increased investment in R&D and CapEx.

• Five-year track record shows over 50% sales growth, 60% EBIT growth, and 70% EPS growth at constant currency, with more than GBP 11 billion in free cash flow generated.

• Business benefits from broad geographic and sectoral exposure, reducing risk and capturing rising global defense spending.

• Excellent visibility of long-term growth, underpinned by a substantial pipeline and multi-year programs.

Financial highlights

• Sales grew 10% to GBP 30.7 billion, with organic growth at 9%.

• Underlying EBIT increased 12% to GBP 3.3 billion, with a margin of 10.8% (20 bps expansion).

• Underlying EPS increased 12% to 75.2p; dividend per share up 10% to 36.3p.

• Free cash flow reached GBP 2.2 billion, exceeding guidance, and net debt reduced by 22% to GBP 3.8 billion (net debt/EBITDA 0.9x).

• Order intake was GBP 37 billion (book-to-bill 1.2), with backlog at a record GBP 84 billion.

Outlook and guidance

• 2026 sales expected to grow 7%-9%, with EBIT and EPS growth of 9%-11%.

• Free cash flow for 2026 expected to exceed GBP 1.3 billion, reflecting advance unwinds and high CapEx.

• Three-year (2026-2028) free cash flow target set to exceed GBP 6 billion.

• Segment sales growth guidance: Electronic Systems up 6–8%, Platforms & Services up 9–11%, Air up 9–11%, Maritime up 5–7%, Cyber & Intelligence up 5–7%.

• Strong visibility on long-term growth, with order backlog and program positions totaling around GBP 260 billion.