BAE Systems (LON: BA.) has lifted its 2026 free cash flow guidance to about £3bn from more than £2bn, but the shares were slightly lower in early trading. The defence and aerospace group, which makes combat aircraft systems, submarines, warships and munitions, also said it has won £33bn of orders so far this year.
The shares opened at 1942.5p, above yesterday’s close of 1917.5p, then faded. In early trading they were at 1905.5p, about 0.6% lower on a delayed quote. They closed at 1846p on Friday, down from 1988p on Wednesday, before recovering to yesterday’s close.
The 7am market update left sales, underlying EBIT (adjusted operating profit) and underlying earnings per share guidance unchanged from the July upgrade. Those call for growth of 8% to 10%, 10% to 12% and 11% to 13% respectively. Free cash flow, the cash left after running costs and investment, was £2.2bn in 2025.
Investing.com reported that Jefferies puts consensus free cash flow at about £2.3bn, so the new figure sits well above it. The £33bn of orders includes about £4.3bn of further UK Dreadnought submarine funding, about £1.6bn for the Global Combat Air Programme and about $1.0bn of US munitions funding. BAE expects further agreements before year-end.
The cash upgrade carries caveats. It includes some benefit from customer advances, payments received before work is done, and BAE does not say how much. Maritime is subdued as Type 26 frigate work goes through its first-in-class stage, though the other divisions have more than offset it.
Jefferies analysts said the update reinforces their view that meaningful margin recovery in Maritime will take time. Charles Woodburn, BAE’s Chief Executive, struck a more confident tone.
We’ve delivered strong financial and operational performance year to date, as well as positive order intake momentum. Our substantial backlog provides good visibility and, with our portfolio aligned to evolving threats and customer priorities, we remain well positioned to deliver sustainable growth over the years ahead.
Charles Woodburn, Chief Executive, BAE Systems
BAE expects to return about £1.6bn to shareholders in 2026, including about £500m of share buybacks. Full-year results are due on the 19th of February.