BAE Systems Shares Fall Despite Upgraded Full-Year Sales, Order Intake Declines

BAE Systems reported strong first-half 2025 results with sales rising 11% to £14.6 billion and underlying EBIT increasing 13% to £1.6 billion, leading to an upgraded full-year guidance for sales growth of 8-10% and EBIT growth of 9-11%. Despite these positive financial results, shares fell between 1.5% and 3% due to concerns over a lower order intake of £13.2 billion compared to £15.1 billion the previous year, a sharp decline in free cash flow to £219 million, and increased net debt of £6.1 billion following recent acquisitions and debt financing. The company’s order backlog remained substantial at £75.4 billion, just below record levels, supporting long-term growth prospects amid rising global defense spending. CEO Charles Woodburn highlighted ongoing investments in new facilities, talent, and advanced programs like the Future Combat Air System, positioning BAE to benefit from increased government military expenditures worldwide. Market analysts noted that while short-term profit-taking affected the stock price, BAE’s diversified portfolio and upgraded outlook underpin its strong market performance, with shares having gained around 60% year-to-date, making it one of the best-performing FTSE 100 stocks. Investor caution remains over cash conversion and integration of acquisitions, but BAE’s solid operational delivery and sector momentum suggest continued growth potential.