European defence shares were on the back foot on Tuesday but BAE Systems PLC (LSE:BA.) was the least affected as it confirmed that the second tranche of its three-year £1.5 billion share buyback is beginning.
It has instructed Morgan Stanley to buy up to £500 million by the end of June 2026 and cancelling them to reduce the number of shares in issue.
The buyback was first announced by the FTSE 100 company in 2023, before this year saw the UK and other governments announce large increases in defence spending.
The most recent update from BAE, in early May, revealed that trading so far in 2025 has been in line with expectations, with full-year guidance maintained for sales to grow between 7% and 9% and underlying EBIT and earnings per share growth of 8% to 10%.
Its order backlog and pipeline remain strong, BAE noted, with key contract wins including nearly $800 million for integration support services to the US Air Force and over $360 million in Amphibious Combat Vehicle orders..