BAE Systems plc (LON:BA) has announced its Preliminary Results Announcement for 2025
Charles Woodburn, BAE SYstems Chief Executive, said: “Our results highlight another year of strong operational and financial performance, thanks to the outstanding dedication of our employees. In a new era of defence spending, driven by escalating security challenges, we’re well positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future. With a record order backlog and continuing investment in our business to enhance agility, efficiency and capacity, we’re confident in our ability to keep delivering growth over the coming years.”
Financial highlights
| Financial performance measures as defined by Group1 | Year ended 31 December 2025 | Year ended 31 December 2024 | Variance2 | |
| Sales | £30,662m | £28,335m | +10 | % |
| Underlying earnings before interest and tax (EBIT) | £3,322m | £3,015m | +12 | % |
| Underlying earnings per share (EPS) | 75.2p | 68.5p | +12 | % |
| Free cash flow | £2,158m | £2,505m | £(347)m | |
| Order intake | £36.8bn | £33.7bn | £3.1bn | |
| Order backlog | £83.6bn | £77.8bn | £5.8bn | |
| Financial performance measures as derived from IFRS | Year ended 31 December 2025 | Year ended 31 December 2024 | Variance2 | |
| Revenue | £28,336m | £26,312m | +8 | % |
| Operating profit | £2,925m | £2,685m | +9 | % |
| EPS – basic | 68.8p | 64.9p | +6 | % |
| Net cash flow from operating activities | £3,432m | £3,925m | £(493)m | |
| Order book | £63.1bn | £60.4bn | £2.7bn | |
| Dividend per share | 36.3p | 33.0p | +10 | % |
As defined by Group
– Sales increased 10%2 to a record £30.7bn, with growth in all of our sectors. Organic growth was 9%2.
– Underlying EBIT increased by 12%2 with a 20bps increase in return on sales from 10.6% to 10.8%.
– Underlying EPS increased by 12%2.
– Free cash flow was strong at £2,158m. Significant customer advances were received late in the year, capital expenditure remained close to record levels at c.£1bn and research and development (R&D) spend increased.
– Our order backlog grew by £5.8bn to a record £83.6bn. Order intake was strong at £36.8bn, with all sectors performing well, reflecting the continued relevance of our diverse geographic footprint and multi-domain capabilities.
As derived from IFRS
– The growth in revenue of 8% reflects the same strong operational performance in sales across the portfolio, but excludes the impact of our equity accounted investments.
– Operating profit was up 9% as the growth in underlying EBIT was offset by additional costs from the amortisation of acquired intangibles, reflecting the significant acquisitions in the prior year which included Ball Aerospace.
– Basic EPS was up 6%.
– Net cash flow from operating activities reflected movements on customer advances and working capital commitments.
1. We monitor the underlying financial performance of the Group using alternative performance measures (APMs). These measures are not defined in International Financial Reporting Standards (IFRS) and therefore are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. The relevant IFRS measures are presented where appropriate. The purposes and definitions of non-GAAP measures are provided in the Alternative performance measures section on page 40.
2. Growth rates for sales, underlying EBIT and underlying EPS are on a constant currency basis (i.e. calculated by translating the results from entities in functional currencies other than pounds sterling for the year ended 31 December 2024 to pounds sterling at the average exchange rate of such currencies for the year ended 31 December 2025). The comparatives have not been restated. All other growth rates and year-on-year movements are on a reported currency basis.
Delivering for our customers
Our continued focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers worldwide. During the year, we secured £36.8bn of orders and made good progress executing on our long-term major programmes. Highlights included:
– The UK Government announced an agreement with Türkiye to acquire 20 Typhoon aircraft, along with an associated weapons package. The deal is anticipated to be worth £4.6bn to BAE Systems and will sustain Typhoon production in the years to come, helping to sustain 20,000 jobs across the UK.
– We delivered the final two Typhoon aircraft to Qatar during the year, bringing the Qatari Emiri Air Force fleet total to 24.
– Launching Edgewing, a joint venture with our international industry partners in Italy and Japan on the Global Combat Air Programme (GCAP). Edgewing will be accountable for the design and development of the next-generation combat aircraft under the programme.
– Norway selected our Type 26 frigate for its future warship procurement programme. The £10bn Government-to-Government agreement paves the way for the UK’s largest ever warship export deal by value.
– We played a critical role in preparing Royal Navy ships for the UK Carrier Strike Group 2025 and the Royal Navy selected our all-electric Malloy T-150 uncrewed air systems (UAS) to transport vital supplies between the ships for the first time during its deployment to the Indo-Pacific.
– We secured a $1.2bn (£0.9bn) contract to provide the US Space Force with space-based missile tracking capabilities as the prime contractor to design and build a constellation of satellites.
– Our Armored Multi-Purpose Vehicle (AMPV) programme celebrated its 500th delivery milestone during the year and is executing under full-rate production toward meeting the US Army’s plan to field nearly 3,000 AMPVs in its Armored Brigade Combat Teams.
– We marked key combat vehicle milestones with the first CV9030 MkIV infantry fighting vehicle unveiled for the Czech Republic and the first three BvS10 vehicles presented to Sweden, Germany and the UK.
– Her Royal Highness The Princess of Wales officially named HMS Glasgow, the first of eight Type 26 frigates we are building for the Royal Navy. Final outfitting continues on HMS Glasgow and HMS Cardiff at our Scotstoun yard, whilst HMS Belfast, HMS Birmingham and HMS Sheffield are progressing at our Govan site.
– We laid the keel of HMS Dreadnought, the first of four Dreadnought Class submarines we are constructing for the Royal Navy, at our Barrow-in-Furness shipyard in the UK.
Investing in tomorrow
Alongside strong operational delivery, we continue to invest in our people, R&D and capital expenditure. Highlights included:
– We officially opened the Janet Harvey Hall at our Govan site in Glasgow, UK. The hall has capacity for two Type 26 frigates to be constructed side-by-side, with HMS Belfast and HMS Birmingham currently under construction in the hall.
– Her Royal Highness The Princess Royal officially opened our Applied Shipbuilding Academy in Glasgow, UK. The £12m facility comprises a multi-purpose flexible learning hub and provides a high quality, hands-on training environment.
– In the UK, Secretary of State for Defence, John Healey, opened our Sheffield facility where we will initially deliver M777 howitzers, with plans to evolve to develop and produce a range of combat systems to support the Government’s ambitions to revitalise UK artillery capacity.
– We opened a new shiplift and land-level repair complex at our Jacksonville, Florida, shipyard. The $250m (£190m) investment significantly enhances the capabilities of the complex and increases its capacity to maintain and repair US Navy vessels and commercial ships.
– We continued to invest in our manufacturing site in Louisville, Kentucky, and shipyard in Jacksonville, Florida to ensure we have the capability and capacity to build and support the US Navy, and its maritime partners, in the future build of submarines and surface ship maintenance.
– During the year, we recruited over 2,500 early careers employees across our key markets and we have a record 6,800 apprentices, graduates and undergraduates in training across our UK businesses.
Capital deployment
– The Board has recommended a final dividend of 22.8p, taking the total dividend for 2025 to 36.3p – an increase of 10% on last year. Subject to shareholder approval, the final dividend will be paid on 4 June 2026 to shareholders on the share register on 24 April 2026.
– During the year, the Company repurchased 30m shares under our share buyback programme, at a cost of £502m. Combined with dividends, the Group returned £1,529m to shareholders in the year ended 31 December 2025.
Group guidance1 for 2026
Guidance is provided on the basis of an exchange rate of $1.32:£1, which is in line with the actual 2025 exchange rate.
Results
| Year ended 31 December 2026 | Guidance | Year ended 31 December 2025 |
| Sales | Increase by 7% to 9% | £30,662m |
| Underlying EBIT | Increase by 9% to 11% | £3,322m |
| Underlying EPS | Increase by 9% to 11% | 75.2p |
| Free cash flow | >£1.3bn | £2.2bn |
| Three-year cumulative free cash flow guidance | Guidance |
| Cumulative free cash flow 2024-2026 | In excess of £6.0bn(previously in excess of £5.5bn) |
| Cumulative free cash flow 2025-2027 | In excess of £5.5bn |
| Cumulative free cash flow 2026-2028 | In excess of £6.0bn |
– Underlying net finance costs c.£370m
– Effective tax rate c.22%
– Non-controlling interests c.£80m
Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£500m, underlying EBIT by c.£70m and underlying EPS by c.1.4p.
1. While BAE Systems is subject to geopolitical and other uncertainties, the following guidance is provided on current expected operational performance. The guidance is based on the measures used to monitor the underlying financial performance of the Group.
Analyst and investor presentation
A presentation, for analysts and investors, of the Group’s Results for 2025 will be available at 9.30am GMT today (18 February 2026) on the investor website, followed by a live Q&A.
Details can be found on investors.baesystems.com, together with the presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day.
