BAE Systems Lifts Cash Flow Guidance Again as Robust Defense Spending Fuels Orders — Update

By Mauro Orru

BAE Systems raised its free cash flow projection for the second time this year as orders keep climbing thanks to robust military spending from governments at a time when geopolitical tensions remain elevated.

The U.K. arms maker said free cash flow this year should come in at about 3 billion pounds, equivalent to $3.98 billion, up from prior guidance of more than 2 billion pounds. The group said its new forecast included some benefits from customer advances it had received to date.

The upgrade marks the second time BAE Systems has revised its targets for the year. In July, the company lifted its annual sales, profitability and cash flow targets after a strong first half, a sign of confidence that its business would remain strong for the rest of the year.

BAE Systems, like many of its European rivals, has emerged as a key beneficiary of higher defense spending following Russia's invasion of Ukraine. Governments have placed a steady stream of orders to replenish their stockpiles after diverting weapons to Kyiv. Its stock is up more than threefold since February 2022.

The company makes combat vehicles, ammunition, missile launchers and artillery systems, including the M777 howitzer that Ukraine has employed widely in its fight against Russia. It also provides cybersecurity services, electronic warfare and night vision systems, surveillance and reconnaissance sensors.

Chief Executive Charles Woodburn said order intake momentum remained positive and that the group's substantial backlog provided good visibility that it would continue to grow in the coming years. Orders grew to 33 billion pounds so far this year, up from more than 27 billion pounds a year earlier.

The company said its electronic systems, air and platforms and services businesses had fared well in the second half so far, more than offsetting subdued growth and margins in its maritime operations.

The group secured about $1 billion in incremental funding for key munitions programs as well as roughly 1.5 billion pounds related to its share of orders through MBDA, a joint venture that manufactures missiles with France's Airbus and Italy's Leonardo.

Over the summer, another joint venture that BAE Systems shares with Leonardo and Japan's Mitsubishi Heavy Industries secured a contract valued at 4.6 billion pounds to develop a new stealth fighter jet under the Global Combat Air Program, or GCAP.

BAE Systems said it continued to expect sales growth of 8% to 10% this year. Underlying earnings before interest and taxes--a key measure of profitability--should still grow 10% to 12%, while underlying earnings per share, another closely watched metric, are still expected to grow 11% to 13%.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

November 12, 2026 03:14 ET (08:14 GMT)