BAE Systems earnings: Record after record in the defense industry

BAE Systems, the UK defense equipment supplier, published its results on Tuesday. The company is posting gains of a few percent after noticeably beating shareholders’ lofty expectations. Valuations have once again reached all-time highs (around £21 per share).

The UK economy appears to be in increasing trouble; however, steadily rising geopolitical tensions are keeping the output of the UK’s industry leaders running at full speed.

Results for fiscal year 2025 under IFRS:

• Annual revenue increased to £28.3 billion, up 8% year on year.
• EPS increased 6% year on year to 68.8 pence.
• The company’s order backlog expanded by £2.7 billion, reaching £63.1 billion.

According to the company’s accounting policy:

• Annual sales rose 10% to £30.6 billion.

During the conference, company representatives highlighted, above all, a strong increase in defense spending in the US and the UK. The company expects progress in platform programs: Eurofighter, MBDA, and CV90.
This supports the company’s valuation and enables optimistic forecasts. Management guided for FCF of $1.3 billion by the end of 2026. Expected sales growth next year is 7–9%, and EPS growth is projected at 9–11%.
The expected dividend is 36.3 pence per share, representing a 10% increase.

The best-performing segment is platforms and services. EBIT in this segment rose 30%, alongside a 17% increase in sales.

The air segment grew 9%, and the maritime segment grew 11%, although the latter also recorded a 3% decline in EBIT margin.

BA.UK (D1)

Source: xStation5