BAE Systems plc (LON:BA) has provided the following market update ahead of its Annual General Meeting today.
Highlights:
· Strong operational and financial performance so far in 2026.
· Full year guidance maintained.
· Increased defence spending across all our key markets.
· Well positioned for growth over the medium term.
Charles Woodburn, BAE Systems Chief Executive, said:
“We’ve delivered a strong start to 2026, underpinning our full‑year guidance. Our geographic breadth, proven multi‑domain capabilities, and focus on operational excellence and innovation are enabling consistent delivery of critical programmes. We’re well positioned for both current and future opportunities in defence.”
Market update
The Group has traded well in the first four months of the year, delivering strong operational and financial performance. We remain on track to achieve our full year guidance.
Around the world, security threats continue to grow, leading governments to increase defence spending. Across our markets, sustained investment and deliberate positioning have resulted in a proven portfolio of capabilities that aligns with customer priorities and evolving future challenges.
The combination of increased defence spending with strong portfolio alignment, provides a supportive backdrop for growth over the medium term. We expect significant opportunities across our business, including space systems, missile and air defence systems, drones and counter drone technology, electronic warfare, combat aircraft, combat vehicles, frigates and submarines, among other customer priorities.
Guidance
We expect strong growth in sales, EBIT and EPS in 2026, alongside solid cash generation. Full-year guidance remains unchanged from the preliminary results announcement published on 18 February 2026.
| · Sales | +7% to +9% (2025: £30.7bn) |
| · Underlying EBIT | +9% to +11% (2025: £3.3bn) |
| · Underlying EPS | +9% to +11% (2025: 75.2p) |
| · Free cash flow in 2026 | >£1.3bn |
Guidance is provided on a constant currency basis, using the average GBP:USD exchange rate in 2025 of 1.32. As a guide, a 5 cent movement in the GBP:USD exchange rate impacts sales by c.£500m, underlying EBIT by c.£70m and underlying EPS by c.1.4p.
Order intake
Notable awards received in the year to date include:
· Air – c.£2.5bn contract to provide training and support equipment and services for the Republic of Türkiye’s recently ordered Eurofighter Typhoon aircraft.
· Air – c.£1.1bn of MBDA orders primarily from securing air defence orders, Aster, VL MICA and Mistral, with European customers.
· Electronic Systems – the Space & Mission Systems business received c.$235m in incremental funding under the $1.2bn Epoch 2 missile warning and tracking satellite programme and a c.$325m order under a restricted national space programme.
· Platforms & Services – Bofors received a contract valued at over $200m for ARCHER artillery systems and a c.$180m contract for TRIDON Mk2 anti-aircraft systems for the Swedish Army for engaging a range of aerial threats including drones.
· Platforms & Services – Maritime Solutions received a US Navy contract worth over $200m to maintain and upgrade the USS Iwo Jima shipboard systems to accommodate Joint Strike Fighter flight operations.
Balance sheet and capital allocation
Our strong financial position enables us to implement all parts of our capital allocation policy. We continue to prioritise investment in our business to support organic growth, pay dividends to our shareholders, explore value enhancing acquisition opportunities and execute our share buyback programme.
The 2025 final dividend of 22.8 pence per share will be paid, subject to shareholder approval, on 4 June 2026.
As at 6 May, we have repurchased £166m of shares in the year and have now completed £930m of the three-year £1.5bn share buyback programme, which commenced in July 2024.
Half year results
BAE Systems will announce its results for the six months ending 30 June 2026 on 30 July 2026.
