The U.K. defense company upgraded full-year profit and cash flow guidance after reporting higher first-half sales, earnings, order intake and a record backlog amid sustained military spending.
BAE Systems upgraded its 2026 guidance across sales, profit and cash flow after reporting stronger first-half performance and saying government defense budgets continue to rise in response to a volatile global threat environment. The company now expects 2026 sales growth of 8% to 10%, up from previous guidance of 7% to 9%, underlying EBIT growth of 10% to 12% versus 9% to 11% previously, and underlying EPS growth of 11% to 13% versus 9% to 11%. It also raised its free cash flow target to more than £2.0 billion from more than £1.3 billion. For the six months ended June 30, BAE Systems reported sales of £15.77 billion, up 9%, underlying EBIT of £1.70 billion, up 11%, and underlying basic EPS of 38.9 pence, up 13%. Free cash flow was £1.79 billion, compared with an outflow of £368 million a year earlier, reflecting a high level of customer advances. Order intake rose to £16.4 billion from £13.2 billion, and the company ended the period with a record order backlog of £84.0 billion. On an IFRS basis, revenue increased 8% to £14.62 billion, operating profit rose 13% to £1.50 billion, basic EPS increased 6% to 34.1 pence, net cash flow from operating activities climbed to £2.24 billion from £74 million, and the interim dividend was raised 11% to 15.0 pence. The company highlighted contract wins and programme progress across combat air, munitions, artillery, space and naval systems, while continuing to invest in production capacity and defense technology development in the U.S., U.K., Sweden and elsewhere.