BAE Systems plc (LON:BA) has announced its Half-yearly Report 2025.
Charles Woodburn, Chief Executive, said “Our teams have delivered another strong operational and financial performance in the first half of the year, giving us the confidence to upgrade our guidance. In this heightened global threat environment, we continue to deliver mission critical capabilities to armed forces around the world and invest in our people, technologies and facilities to drive the improved efficiency, capacity and agility needed to meet the increasing demand for our highly relevant products and services. The breadth and depth of our geographic and product portfolio, together with our trusted track record of delivery, strengthen our confidence in the positive momentum of our business.”
Financial highlights
| Financial performance measures as defined by the Group1 | Six months ended 30 June 2025 | Six months ended 30 June 2024 | Variance2 |
| Sales | £14,621m | £13,399m | +11% |
| Underlying earnings before interest and tax (EBIT) | £1,550m | £1,393m | +13% |
| Underlying earnings per share (EPS) – basic | 34.7p | 31.4p | +12% |
| Free cash flow | £(368)m | £219m | £(587)m |
| Order intake | £13.2bn | £15.1bn | £(1.9)bn |
| As at 30 June 2025 | As at 31 December 2024 | Variance | |
| Order backlog | £75.4bn | £77.8bn | £(2.4)bn |
| Financial performance measures as derived from IFRS | Six months ended 30 June 2025 | Six months ended 30 June 2024 | Variance2 |
| Revenue | £13,571m | £12,477m | +9% |
| Operating profit | £1,327m | £1,296m | +2% |
| EPS – basic | 32.3p | 31.4p | +3% |
| Net cash flow from operating activities | £74m | £757m | £(683)m |
| Dividend per share | 13.5p | 12.4p | +9% |
| As at 30 June 2025 | As at 31 December 2024 | Variance | |
| Order book | £57.0bn | £60.4bn | £(3.4)bn |
As defined by the Group
– Sales increased 11%2 in the period, with all sectors contributing growth. Organic growth was 9%2.
– Underlying EBIT was up 13%2, increasing the Group’s return on sales for the period to 10.6%. Organic growth was 10%2.
– Underlying EPS increased 12%2 to 34.7p, after accounting for the Group’s underlying net finance costs and tax.
– Free cash outflow of £368m is inclusive of movements on customer advances and is in line with expectations.
– Order intake of £13.2bn remained high across all sectors and we closed the period with an order backlog of £75.4bn.
As derived from IFRS
– The reported growth in revenue of 9%2 reflects the same strong operational performance across the portfolio but excludes the impact of our equity accounted investments.
– Operating profit increased 2%2 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. The prior year also included a one-off profit on the disposal of our partial interest in Air Astana of £75m.
– Basic EPS was up 3%2 to 32.3p, after accounting for net finance costs and tax.
– Net cash flow from operating activities is also inclusive of movements in customer advances in the period, as well as timing of other working capital requirements.
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 38.
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 period ended 30 June 2024 to pounds sterling at the average exchange rate of such currencies for the period ended 30 June 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 focus on operational performance and contracting discipline enables our consistent delivery of critical capabilities and technologies for our customers. In the first half of the year, we secured £13.2bn of orders and made good progress executing on our long-term major programmes.
Highlights in the period included the following:
– 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.
– Concept and assessment work on the Global Combat Air Programme (GCAP) continues with our international partners and we received a further £1.0bn of funding on the UK assessment phase contract in the first half of the year.
– We launched Edgewing, a joint venture with our international industry partners in Italy and Japan on GCAP, which will be accountable for the design and development of the next generation combat aircraft under the programme.
– 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) celebrated its 500th delivery milestone and is on track, in full-rate production, to meet the US Army’s plan to field nearly 3,000 AMPVs in its Armored Brigade Combat Team formations.
– 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 ongoing deployment to the Indo-Pacific.
– 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, at a ceremony in Glasgow, UK. Work continues on HMS Glasgow’s sister ships – HMS Cardiff moved to our Scotstoun yard last year to begin outfitting whilst HMS Belfast, HMS Birmingham and HMS Sheffield are progressing at our Govan site.
Investing to support future growth
We continue to invest in our technologies, facilities and people to boost efficiency, capacity and innovation, deliver on our programmes and respond to the emerging threats our government customers are facing:
– 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 capacity on the site to maintain and repair US Navy vessels and commercial ships.
– We officially opened the Janet Harvey Hall at our ship build 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.
– Secretary of State for Defence, John Healey, opened our new £25m artillery factory in Sheffield, which is the first to restore critical gun barrel manufacturing capability in the UK and is on track to be operational before the end of the year.
– We have invested more than £8m to develop innovative new approaches in the production of energetics and propellants, which will support the ramp up of our critical munitions production and strengthen supply chain resilience for the UK and its allies.
– We made good progress against our target to recruit 2,400 graduates and apprentices in the UK this year. In South Australia, we welcomed our largest ever cohort of apprentices, which is part of a wider intake of more than 250 graduates, apprentices and interns in 2025.
Capital deployment
– The strength and outlook for the Group, alongside our disciplined capital allocation, means that, after investing in our people, technologies and capital expenditure, we have continued to make significant returns to shareholders. In the first six months of the year, we returned £849m to shareholders, a 5% increase compared to the £812m returned in the first half of 2024. This reflected paying £622m in respect of the 20.6p 2024 final dividend (2024 £562m in respect of the 18.5p 2023 final dividend) and repurchasing 15,038,662 (2024 19,403,928) ordinary shares at a total cost of £227m including transaction costs (2024 £250m) under our ongoing buyback programme.
– In addition, the Board has declared an interim dividend of 13.5p in respect of the first six months of the year, which will be paid on 3 December 2025.
2025 Upgraded Group guidance1
Given the strong operational performance in the first half, we are upgrading our sales and underlying EBIT guidance for the full year by 100bps each. Sales are now expected to increase in the range of 8% to 10% whilst underlying EBIT is expected to increase in the range of 9% to 11%. The share price increase since the start of the year is expected to result in fewer shares being repurchased which, along with a marginally higher tax rate, means our guidance for EPS growth remains unchanged between 8% to 10%. Our free cash flow target remains >£1.1bn.
Guidance is provided on a constant currency basis using an exchange rate of $1.28:£1, which is in line with the actual 2024 exchange rate.
| Year ended 31 December 2025 | Updated guidance | Previous guidance | Year ended 31 December 2024Results |
| Sales | Increase in the range of 8% to 10% | Increase in the range of 7% to 9% | £28,335m |
| Underlying EBIT | Increase in the range of 9% to 11% | Increase in the range of 8% to 10% | £3,015m |
| Underlying EPS | Increase in the range of 8% to 10% | Increase in the range of 8% to 10% | 68.5p |
| Free cash flow target | >£1.1bn | >£1.1bn | £2,505m |
– Underlying net finance costs c.£400m
– Effective tax rate c.20%
– Non-controlling interests c.£90m
Sensitivity to foreign exchange rates: the Group operates in a number of currencies, the most significant of which is the US dollar. As a guide, a 5 cent movement in the £/$ exchange rate will impact sales by c.£525m, underlying EBIT by c.£75m and underlying earnings per share by c.1.4p.
1. Whilst the Group is subject to geopolitical and other uncertainties, the Group 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. Reconciliations from these measures to the financial performance measures defined in IFRS are provided in the Alternative performance measures section on page 38.
Analyst and investor presentation
A presentation, for analysts and investors, of BAE Systems’ half year results for 2025 will be available via webcast at 09.30am today (30 July 2025).
Details can be found on investors.baesystems.com, together with presentation slides and a copy of this report. A recording of the webcast will be available for replay later in the day.
