BAE Systems (LSE:BA) raised its full-year guidance for 2026, citing strong operational and financial performance across all sectors in the six months to 30 June.
Sales rose 9% on a constant currency basis, with underlying earnings before interest and tax (EBIT) up 11% and underlying earnings per share (EPS) up 13% to 38.9p.
Free cash inflow reached £1,791m, reflecting a high level of customer advances not repeated from the prior-year period.
Order intake totalled £16.4bn, taking the order backlog to a record £84bn.
"Across the business, our outstanding teams have delivered another strong period of operational and financial performance, which gives us the confidence to upgrade our full year guidance," said chief executive Charles Woodburn.
The group now expects full-year sales growth of 8% to 10%, up from a prior range of 7% to 9%, with underlying EBIT growth guided at 10% to 12% and underlying EPS growth at 11% to 13%.
Cumulative free cash flow guidance for 2024 to 2026 was also upgraded, while targets for the 2025-2027 and 2026-2028 periods remain unchanged.
The board declared an interim dividend of 15.0p, payable on 2 December, after returning £933m to shareholders in the first half through dividends and buybacks, up 10% from £849m a year earlier.
Among the period's contract wins were a £5.9bn award to progress the UK's Dreadnought submarine programme and international Global Combat Air Programme contracts worth more than £5bn secured through Edgewing.
News Intelligence what this means for the company
BAE Systems raised its 2026 guidance across sales, profit and EPS after H1 showed underlying EBIT up 11% and free cash flow of £1.8bn boosted by customer advances. The upgrade—sales growth now 8–10% vs. prior 7–9%, underlying EBIT growth 10–12% vs. 9–11%—reflects confidence in execution, underpinned by record £84bn order backlog and major contract wins including a £5.9bn Dreadnought submarine award.
The guidance lift and record backlog signal sustained demand for UK defence capabilities, though the H1 cash flow benefited from timing of customer advances unlikely to repeat at the same level. The cumulative 2024–2026 free cash flow upgrade is material, but 2025–2027 and 2026–2028 targets remain flat, suggesting management sees the near-term tailwind as cyclical rather than structural.
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