BAE Systems (BA) Trading Update summary

Trading and financial performance

• Trading year-to-date aligns with management expectations, with operational performance remaining strong.

• Full-year 2025 guidance is maintained, expecting revenue growth of 7–9%, EBIT growth of 8–10%, and EPS growth of 8–10%.

• Free cash flow for 2025 is projected to exceed £1.1bn, with guidance based on a GBP:USD rate of 1.28.

• Sensitivity to currency fluctuations: a 5 cent move in GBP:USD impacts sales by ~£525m, EBIT by ~£75m, and EPS by ~1.4p.

Order intake and market opportunities

• Significant contracts include $356m for Armored Multi-Purpose Vehicles, nearly $800m for US Air Force ISC, and over $360m for Amphibious Combat Vehicles.

• Artillery package contracts total nearly $300m, including ARCHER and TRIDON Mk2 systems.

• Additional awards include Canadian River-class Destroyer and c.£600m for MBDA.

• Order backlog and pipeline provide strong visibility and support for long-term growth.

Market environment and strategic positioning

• Defence spending is rising globally, especially in Europe, the US, Asia-Pacific, and the Middle East.

• UK plans to increase defence spending to 2.5% of GDP from 2027, with defence identified as a key growth sector.

• US administration prioritizes unmatched military strength, with spending increases and reprioritization.

• Portfolio aligns with key customer priorities, including combat vehicles, electronic warfare, and missile defence.

• US tariffs are not expected to materially impact operations due to a domestic supply chain.