BAE Systems sets sights on higher profits as defence spending rises

Industry & Services Aerospace Written by: Oliver Haill 08:01 Thu 30 Jul 2026 --> Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Oliver Haill Oliver has been writing about companies and markets since the early 2000s, cutting his teeth as a financial journalist at Growth Company Investor with a focusing on AIM companies and small caps, before a few years later becoming a section editor and then head of research. He joined Proactive after a couple of years freelancing, where he worked for the Financial Times Group, ITV, Press Association, Reuters sports desk, the London Olympic News Service, Rugby World Cup News Service, Gracenote... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. BAE Systems PLC ( LSE:BA. ) View Price & Profile BAE Systems sets sights on higher profits as defence spending rises Published: 08:01 30 Jul 2026 BST BAE Systems PLC (LSE:BA.) upgraded its full-year guidance after higher defence spending helped lift first-half sales and orders, while free cash flow improved sharply. Sales increased 9% to £15.8 billion in the six months to June, with growth across all divisions. Underlying operating profit rose 11% to £1.7 billion and underlying earnings per share climbed 13% to 38.9p. Order intake increased to £16.4 billion from £13.2 billion, leaving BAE with a record backlog of £84 billion. The defence group now expects sales to grow by between 8% and 10% in the 2026 financial year, up from its previous forecast of 7-9%, with underlying operating profit growth expected to reach 10-12%, compared with the previous 9-11% range. Guidance for underlying earnings per share growth was raised to 11-13% from 9-11%. BAE also lifted its free cash flow target to more than £2 billion from more than £1.3 billion. Its cumulative target for 2024-2026 increased to more than £6.7 billion from £6 billion. First-half free cash flow reached £1.8 billion, compared with an outflow of £368 million last year, helped by customer advances. Chief executive Charles Woodburn said: "The global threat picture remains highly volatile and governments are responding with sustained increases in their defence budgets." BAE secured orders including a £5.9 billion contract supporting Britain's Dreadnought nuclear submarine programme and more than £5 billion of contracts for the Global Combat Air Programme. The interim dividend was raised 11% to 15p a share. BAE returned £933 million to shareholders through dividends and buybacks during the half. Continue reading