BAE Systems upgrades cash flow outlook as order intake tops £33bn

(Sharecast News) - Defence contractor BAE Systems upgraded its free cash flow guidance on Thursday after reporting strong trading momentum across its core businesses and securing more than £33bn of orders so far this year.

BAE Systems said it now expects 2026 free cash flow of around £3bn, up from previous guidance of more than £2bn, helped in part by customer advances. Guidance for sales, underlying earnings and earnings per share was left unchanged following the upgrade provided at the half-year stage.

Trading in the second half was said to have remained strong, with robust performances from the group's electronic systems, air and platforms & services units more than offsetting continued pressure on margins in maritime as work progressed on its Type 26 frigate programme.

BAE said governments across its key markets continued to increase defence spending, supporting a strong pipeline of opportunities and highlighted a "substantial" order backlog and growing exposure to priority areas including munitions, missile defence, combat air, autonomous systems and military vehicles.

Notable contract wins included £4.3bn of additional funding for the UK's Dreadnought submarine programme, £1.6bn relating to the Global Combat Air Programme, around £1.5bn of MBDA orders and significant funding for US Army vehicle and munitions programmes.

BAE continues to expect full-year sales growth of 8% to 10%, underlying earnings growth of 10% to 12% and earnings per share growth of 11%-13%.

The FTSE 100-listed group also reiterated its commitment to shareholder returns, with total cash distributions expected to reach approximately £1.6bn this year, including dividends and around £500m of share buybacks.

As of 1130 GMT, BAE shares were down 0.39% at 1,910p.

Reporting by Iain Gilbert at Sharecast.com

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