LONDON, July 30, 2026 (GLOBE NEWSWIRE) -- BAE Systems said Chief Executive Charles Woodburn described the group's first-half performance as strong across both operations and finances, adding that the result gives the company confidence to upgrade full-year guidance.

Woodburn said BAE Systems continues to invest in its business while meeting current customer needs, with an emphasis on accelerating innovation, improving efficiency and expanding capacity. He cited the company's new collaborative combat aircraft, designed to support a future force of crewed and uncrewed fighter jets, and investment in facilities in Texas and New Hampshire to help support the US Government's goal of quadrupling production of critical munitions.

He also said the global threat environment remains highly volatile and that governments are increasing defence spending. NATO allies have been working toward the alliance's guideline of spending at least 2% of GDP on defence, a target reinforced at the 2023 Vilnius summit, and several European governments have announced plans to exceed that threshold. He said BAE Systems' execution, geographic diversification, continued investment in technology and facilities, healthy order backlog and growing market opportunities position the group for long-term growth.

Financial highlights

On a Group basis, sales increased 9% on a constant-currency basis, with growth reported across all sectors. Underlying EBIT rose 11%, lifting return on sales to 10.8% from 10.6% in 2025. Underlying EPS increased 13% to 38.9p after underlying net finance costs and tax.

Free cash inflow was £1,791m, reflecting a high level of customer advances. No material advances were received in the comparable period.

Order intake totalled £16.4bn and remained strong across all sectors. The group ended the period with a record order backlog of £84.0bn, providing multi-year revenue visibility across its core markets in the UK, US, Australia, and Europe.

Under IFRS, revenue increased 8%, reflecting the same broad operational strength across the portfolio, excluding the impact of equity-accounted investments. Operating profit rose 13% as the group incurred lower amortisation costs for acquired intangibles and lower adjusting items excluded from Underlying EBIT. Basic EPS increased 6% to 34.1p, with higher finance costs and a higher effective tax rate reducing the pace of growth relative to operating profit.

BAE Systems said it monitors underlying financial performance using alternative performance measures that are not defined in IFRS. It also said sales, underlying EBIT and underlying EPS growth rates are presented on a constant-currency basis, while other year-on-year movements are reported on a reported-currency basis.

Delivering for customers

BAE Systems said its focus on operational performance and contracting discipline has supported continued delivery of critical capabilities and technologies for customers. The company said its products and services remain in high demand and that it secured £16.4bn of orders in the first half while making progress on major long-term programmes.

Highlights since the start of the year included:

• a UK Government contract to provide the Republic of Türkiye with training, support equipment and services for 20 Typhoon aircraft ordered in October 2025. Manufacturing is already underway in the UK and across the Eurofighter partner nations, with first delivery scheduled for 2030;
• a successful APKWS® precision weapon test firing from a Eurofighter Typhoon, demonstrating a counter-drone solution. In cooperation with the UK Royal Air Force (RAF), the system moved from testing to operational deployment in the Middle East in under two months, improving the RAF's ability to respond to emerging threats in the region;
• the unveiling of Brontanax™ at the Farnborough International Airshow in July. BAE Systems said it will be the UK's first uncrewed autonomous Collaborative Combat Aircraft (CCA), designed and built by engineers at its Warton site and intended to provide electronic warfare and precision strike capabilities against airborne and ground targets;
• Edgewing's first international contracts for the Global Combat Air Programme (GCAP), with a combined value of more than £5bn, supporting completion of the advanced concept and assessment phase as well as further joint detailed design and development. GCAP is a trilateral partnership between the UK, Italy, and Japan aimed at delivering a sixth-generation fighter by 2035;
• a seven-year framework agreement with the US Department of War (DoW) to quadruple production and accelerate delivery of the infrared seeker for the Terminal High Altitude Area Defense (THAAD) interceptor missile, supporting the DoW's Acquisition Transformation Strategy;
• an additional award for M109A7 Paladin Self-Propelled Howitzer sets valued at $535m (£398m), building on multi-year US Army contracts awarded in 2025 and providing firepower and manoeuvrability for artillery units;
• a contract valued at more than $200m (£149m) for ARCHER artillery systems and a $180m (£134m) contract for TRIDON Mk2 anti-aircraft and counter-UAS systems, both produced by the company's Bofors business in Sweden;
• completion of the Preliminary Design Review for the $1.2bn (£0.9bn) Epoch 2 missile warning and tracking satellite programme less than nine months after the US Space Force contract award, along with incremental funding of $373m (£277m) in the first half;
• support for the A$2.5bn (£1.3bn) export agreement of Australia's High Frequency Surveillance capability system to establish an Arctic Over the Horizon Radar (A-OTHR) in Canada. The agreement took effect on 1 July 2026 and is described as Australia's largest-ever defence export;
• a new £5.9bn contract to fund critical work supporting the UK's Dreadnought Class nuclear deterrent submarines, which the Secretary of State for Defence will announce at BAE Systems' Barrow-in-Furness site in July.

Investing for future growth

BAE Systems said it continues to invest in innovation, efficiency and production capacity as it works on current programmes and responds to emerging threats faced by government customers.

The group said it continued developing its drone and counter-drone portfolio, noting that the British Army and Royal Navy trialled its one-way effector, Nyan. It plans initial trials of its BAE Systems Anti Threat System in August, using smart software, electronic warfare and kinetic measures to address drone threats. Counter-drone capabilities have become a priority for NATO militaries following the extensive use of uncrewed aerial vehicles in the conflict in Ukraine and in Red Sea shipping lanes.

The company also completed the acquisition of Aston Harald Mekaniska Verkstad AB, a Swedish provider of precision-machined large complex structures for aerospace, defence and commercial products. BAE Systems said the acquisition will help improve security of supply for its Bofors artillery business as it increases production capacity and delivery capability.

BAE Systems said it remains on track to invest more than $300m (£223m) over five years to expand production at its Hägglunds facility in Sweden. The investment includes a new logistics centre and an integration and inspection facility, aimed at accelerating production to meet rising demand for combat vehicles across Europe.

In the US, the company opened a new facility in Utah to support Intercontinental Ballistic Missile sustainment and modernisation efforts, and to provide a workspace for engineering, digital transformation and mission operations teams. It also completed a 150,000 square-foot expansion of its Endicott campus in New York and announced an additional $135m (£100m) investment in Austin, Texas, and Hudson, New Hampshire, to increase precision-guided munitions production capacity.

The company said it is making good progress toward its target of recruiting more than 1,100 apprentices and around 1,200 graduates and undergraduates in the UK by the end of 2026.

BAE Systems also launched a new technology incubator programme called Launchpad, designed to move defence technologies beyond prototype development by funding early-stage ventures or spinning them out into independent businesses. During the period, it created a start-up focused on ultrasound technology that enables wireless transmission of data and power through solid barriers, and committed €50m (£43m) to venture capital funds backing European defence-tech start-ups.

Capital distributions

In the first six months of 2026, BAE Systems returned £933m to shareholders through dividends and its share buyback programme, up 10% from £849m in the first half of 2025.

The board declared an interim dividend of 15.0p for the first six months of the year, payable on December 2, 2026.

Upgraded 2026 guidance

Following the strong first-half performance, BAE Systems upgraded full-year guidance across all key financial performance measures. It also upgraded cumulative three-year free cash flow guidance for 2024 to 2026, while guidance for 2025 to 2027 and 2026 to 2028 remained unchanged.

The guidance is based on constant currency using an exchange rate of $1.32:£1, in line with the actual 2025 rate.

The company's updated guidance includes:

• underlying net finance costs of about £340m, compared with about £370m previously;
• an effective tax rate of about 22%;
• non-controlling interests of about £80m.

BAE Systems said a 5 cent move in the £/$ exchange rate would, as a guide, affect sales by about £500m, underlying EBIT by about £70m and underlying EPS by about 1.4p.

The company said its guidance reflects current expected operational performance, although it remains subject to geopolitical and other uncertainties. It added that reconciliations from these measures to IFRS financial performance measures are provided in the Alternative performance measures section of the report.

Analyst and investor presentation

BAE Systems said a webcast presentation for analysts and investors on its 2026 half-year results would be available at 08.00am BST on July 30, 2026, via investors.baesystems.com. Presentation slides and a copy of the report would also be available on the site, and a replay would be posted later in the day.

About BAE Systems

BAE Systems said it employs 112,400 highly skilled people in more than 40 countries. Working with customers and local partners, the company develops, engineers, manufactures and supports products and systems that deliver military capability, protect national security and secure critical information and infrastructure.

As at 30 June 2026 and including share of equity-accounted investments.

Issued by BAE Systems plc. Media hotline: +44 (0) 7801 717 739. www.baesystems.com @BAESystemsplc Ref: 090/2026