BAE Systems PLC has hiked its dividend 10% as it reported record sales and a swelling order book, as rising global defence spending feeds through into its numbers.
The UK defence contractor said sales rose 10% to £30.7 billion in 2025. Underlying earnings before interest and tax increased 12% to £3.3 billion, while underlying earnings per share climbed 12% to 75.2p. Earnings were roughly in line with City forecasts.
Free cash flow came in at £2.16 billion, down from £2.5 billion the year before, reflecting the timing of customer advances and continued high levels of investment, but well ahead of expectations.
Order intake reached £36.8 billion, with the order backlog of work already won but not yet delivered grew £5.8 billion to a record £83.6 billion to provide strong visibility over future revenues.
Major contract wins included an anticipated £4.6 billion deal linked to Türkiye’s planned purchase of 20 Typhoon aircraft, a £10 billion Government-to-Government agreement paving the way for Norway to select the Type 26 frigate, and $1.2 billion contract to provide the US Space Force with space-based missile tracking capabilities.
Chief executive Charles Woodburn said: “In a new era of defence spending, driven by escalating security challenges, we're well positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future.
"With a record order backlog and continuing investment in our business to enhance agility, efficiency and capacity, we're confident in our ability to keep delivering growth over the coming years."
The board recommended a final dividend of 22.8p, taking the total for 2025 to 36.3p, up 10%. The company also spent £502 million on share buybacks during the year.
Looking to the current year, BAE expects sales to rise 7-9%, underlying EBIT to increase 9-11% and underlying earnings per share to grow 9-11%. Free cash flow is forecast to exceed £1.3 billion.
The group also upgraded its three-year cash guidance, now expecting cumulative free cash flow for 2024 to 2026 to exceed £6 billion.