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BAE Systems, Europe’s largest defence contractor, has reported record-breaking results as global defence spending ramps up amid ongoing geopolitical tensions.
The aerospace and weapons manufacturer posted underlying earnings before interest and tax of £3.32 billion for 2025, a 12% increase on the previous year.
Sales rose 10% to a record £30.66 billion, while its order backlog reached an unprecedented £83.6 billion at the end of December.
Total order intake for the year stood at £36.8 billion, highlighting strong demand for its military equipment.
BAE, which produces missiles, tanks, warships and aircraft, has been boosted by governments worldwide increasing defence budgets, with Europe leading the rearmament drive.
Notable contracts last year included a £4.6 billion deal with Turkey for 20 Typhoon aircraft, supporting 20,000 UK jobs, and an order from Norway for Type 26 frigates.
Looking ahead, the company expects underlying earnings growth of 9–11% in 2026 and sales growth of 7–9%, reflecting continued strong demand for its defence capabilities.
Shares in BAE jumped 4% on Wednesday morning, having risen nearly 20% since the start of 2026 and more than tripled since Russia’s invasion of Ukraine in 2022, which sparked a surge in global defence spending.
The results underline BAE’s position as a key player in the global defence market and highlight how geopolitical uncertainty is driving investment in military technology worldwide.
Richard Hunter, head of markets at Interactive Investor, said BAE’s figures reflect the “unfortunate sign of the times that defence stocks are squarely back in fashion, as governments around the world look to protect their interests and lands from growing tensions”.
He added: “The geopolitical backdrop is a reminder that brittle relationships are seemingly never far away, ranging from potential and actual conflicts in the likes of Venezuela, between China and Japan and Russia and Ukraine.
“The backdrop has led to a number of governments pledging a higher percentage of GDP to defence spending over the next decade, which in turn means that opportunities remain within the burgeoning defence sector.”
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