BAE Systems (LON:BA) has raised its full-year sales guidance after a solid first-half performance, driven by higher demand across all divisions and stronger operating margins.
The defence group posted a 2.2% rise in pretax profit to £1.19 billion for the six months to June, while underlying earnings before interest and tax rose 13% to £1.55 billion.
Sales climbed 11% to £14.62 billion, or 9% organically, with all divisions contributing to the growth. IFRS revenue, which strips out equity-accounted investments, rose 8.8% to £13.57 billion.
The company now expects sales to grow between 8% and 10% this year, up from previous guidance of 7% to 9%. Its outlook for underlying EBIT growth has also been raised to 9% to 11%, from 8% to 10% previously. EPS guidance remains unchanged due to fewer expected share buybacks and a slightly higher tax rate.
Despite the upgrades, BAE shares edged 1% lower on Wednesday as analysts suggested the guidance lift fell short of market hopes.
Berenberg noted the new revenue forecast is slightly below consensus, while Jefferies warned the limited upgrade could disappoint investors, despite what it called a “good” first half.
The order book declined to £57.0 billion from £60.4 billion a year ago, while the backlog slipped to £75.4 billion. Free cash flow for 2025 is still expected to exceed £1.1 billion. BAE raised its interim dividend by 8.9% to 13.5p per share.