BAE Systems FY25 Results Boost Dividend as Defense Orders Reach New High

BAE Systems (LSE:BA.) increased its shareholder distributions on Wednesday after securing record defense orders, with rising military expenditure in Europe and the United States driving revenue expansion and strong cash performance.

The company’s board proposed a final dividend of 22.8 pence per share, bringing the total annual payout to 36.3 pence, up 10% from the prior year. During the year, BAE Systems also repurchased 30 million shares for £502 million.

Sales climbed 10% at constant exchange rates to an all-time high of £30.7 billion. Underlying EBIT rose 12% to £3.32 billion, while underlying earnings per share increased 12% to 75.2 pence.

Free cash flow came in at £2.16 billion, aided by customer advance payments received toward year-end. This was partially offset by increased capital expenditures and higher research and development outlays.

Order intake totalled £36.8 billion, pushing the order backlog to a record £83.6 billion. The company reported a book-to-bill ratio of 1.2.

Chief executive Charles Woodburn said the performance reflected “another year of strong operational and financial performance.”

On a reported IFRS basis, revenue advanced 8% to £28.3 billion and operating profit rose 9% to £2.93 billion. Basic earnings per share increased 6% to 68.8 pence, impacted by higher amortisation charges tied to previous acquisitions.

Net debt, excluding lease liabilities, declined 22% to £3.84 billion at year-end.

By division, Electronic Systems generated £7.5 billion in sales, up 8%, with underlying EBIT of £1.16 billion. Platforms & Services posted a 17% rise in revenue to £5 billion and a 30% jump in underlying EBIT to £576 million.

The Air segment delivered £9.3 billion in revenue, up 9%, while Maritime revenue grew 11% to £6.8 billion. However, Maritime underlying EBIT slipped 3% to £457 million, reflecting early-stage programme development and capacity investments. Cyber & Intelligence revenue edged up 2% to £2.4 billion.

Looking ahead, BAE Systems said its 2026 guidance assumes an exchange rate of $1.32 to the pound, with an estimated sensitivity of around £500 million in revenue and £70 million in underlying EBIT for every 10-cent shift in the pound-dollar exchange rate.

In total, the company returned £1.53 billion to shareholders over the year through dividends and share buybacks.