BAE Systems Reports Record Sales and GBP 83.6bn Order Backlog
•February 18, 2026
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Why It Matters
The results confirm BAE’s ability to capture expanding global defence spending, strengthening its cash generation and shareholder returns. The growing backlog and new programme contracts position the firm as a key supplier in the next wave of military modernization.
Key Takeaways
- •Sales hit £30.7bn, up 10% constant currency.
- •Order backlog reached record £83.6bn, up from £77.8bn.
- •Free cash flow fell to £2.16bn, reflecting higher R&D spend.
- •Edgewing joint venture launched for Global Combat Air Programme.
- •2026 outlook targets 7‑9% sales growth, >£1.3bn free cash flow.
Pulse Analysis
Global defence budgets have been on an upward trajectory since 2022, driven by heightened geopolitical tensions in Europe and the Indo‑Pacific. BAE Systems, the United Kingdom’s largest defence contractor, has translated that macro environment into tangible growth, reporting a record £30.7 billion in sales for 2025. The 10% constant‑currency increase outpaces many peers and reflects robust demand for both legacy platforms and emerging technologies such as autonomous weapons and advanced air systems. By securing high‑value contracts like the Edgewing joint venture, BAE is embedding itself in the next generation of combat aircraft.
The financial picture combines strong earnings with strategic reinvestment. Underlying EBIT rose 12% to £3.32 billion, while free cash flow fell to £2.16 billion as the company accelerated research, development and capital projects, including a near‑record £1 billion in capex. A record order backlog of £83.6 billion—up £5.8 billion year‑on‑year—provides a multi‑year revenue runway and cushions the business against short‑term market fluctuations. The surge in apprenticeship and graduate recruitment also signals a long‑term talent pipeline essential for sustaining complex weapons programmes.
Looking ahead, BAE’s guidance for 2026 anticipates 7‑9% sales growth and free cash flow exceeding £1.3 billion, reinforcing confidence in continued fiscal discipline despite higher spending. The firm’s dividend increase to 36.3 pence and a £502 million share buyback demonstrate a commitment to returning capital to shareholders while funding future growth. With the Type 26 frigate contract securing the UK’s largest warship export and the Dreadnought‑class submarine programme progressing, BAE is well‑positioned to capture a larger share of the expanding defence market and to drive innovation across land, sea and air domains.
BAE Systems reports record sales and GBP 83.6bn order backlog
BAE Systems has reported another year of strong growth, with record sales and a rising order backlog as the company said it is well positioned to benefit from increased defence spending.
Publishing its full-year results for 2025 on 18 February, the defence giant said sales rose by 10% on a constant currency basis to £30.7 billion, while underlying earnings before interest and tax increased by 12% to £3.32 billion. Underlying earnings per share also rose by 12% to 75.2p.
Chief Executive Charles Woodburn 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.”
The company said it ended the year with a record order backlog of £83.6 billion, up from £77.8 billion in 2024, while order intake climbed to £36.8 billion. Free cash flow totalled £2.16 billion, down from £2.51 billion the year before, which BAE said reflected higher investment, increased research and development spending, and capital expenditure close to record levels at around £1 billion.
Under IFRS measures, BAE Systems reported revenue of £28.3 billion, up 8%, and operating profit of £2.93 billion, up 9%. Basic earnings per share rose 6% to 68.8p.
The company highlighted several major programme developments during the year, including the launch of Edgewing, a joint venture with industry partners in Italy and Japan for the Global Combat Air Programme, and Norway’s selection of the Type 26 frigate design for its future warship procurement programme. BAE described the £10 billion government-to-government agreement as paving the way for the UK’s largest ever warship export deal by value.
In the UK naval sector, the company noted progress across its Type 26 and submarine programmes, including the naming of HMS Glasgow, continued outfitting work at Scotstoun, and ongoing construction activity at Govan. It also said it laid the keel of HMS Dreadnought, the first of four Dreadnought-class submarines being built at Barrow-in-Furness.
BAE Systems said it continued to invest in UK shipbuilding infrastructure, including the opening of the Janet Harvey Hall at its Govan site, which has capacity for two Type 26 frigates to be constructed side by side, and the opening of the Applied Shipbuilding Academy in Glasgow.
The firm also highlighted investment in its Sheffield facility, which it said will initially deliver M777 howitzers, with plans to evolve the site into a wider combat systems production hub.
BAE said it recruited more than 2,500 early careers employees during the year and now has a record 6,800 apprentices, graduates and undergraduates in training across its UK businesses.
The Board recommended a final dividend of 22.8p, taking the total dividend for 2025 to 36.3p, a 10% increase on the previous year. The company also repurchased 30 million shares under its buyback programme at a cost of £502 million, returning a total of £1.53 billion to shareholders through dividends and buybacks.
Looking ahead, BAE Systems issued guidance for 2026 forecasting sales growth of between 7% and 9%, with underlying EBIT and EPS expected to increase by between 9% and 11%. The company also set free cash flow guidance of more than £1.3 billion for the year, while increasing its three-year cumulative free cash flow forecast for 2024 to 2026 to more than £6 billion, up from a previous target of more than £5.5 billion.
The post BAE Systems reports record sales and GBP 83.6bn order backlog first appeared on UK Defence Journal.
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