Finance
UK's BAE Systems forecasts years of growth in ‘new era’ of defence spending, backlog hits record
Published by Global Banking & Finance Review®
Posted on February 18, 2026
2 min readLast updated: February 18, 2026
Home > Finance > UK's BAE Systems forecasts years of growth in ‘new era’ of defence spending, backlog hits record
Quick Summary
BAE Systems, the UK's largest defence contractor, reported a 12% profit rise to 3.32 billion pounds, driven by global demand and a record order backlog.
BAE Systems Anticipates Sustained Growth Amid New Defence Spending Era
BAE Systems' Growth Outlook
By Paul Sandle
Financial Performance Highlights
LONDON, Feb 18 (Reuters) - BAE Systems said a "new era" of defence spending would drive its growth for years to come after the British contractor reported a 12% rise in full-year operating profit on Wednesday and a record 83.6 billion-pound order backlog.
Market Reactions and Stock Performance
Chief Executive Charles Woodburn said on Wednesday the company had seen a year of strong operational and financial performance.
Future Sales and Profit Forecasts
"In a new era of defence spending, driven by escalating security challenges, we're well positioned to provide both the advanced conventional systems and disruptive technologies needed to protect the nations we serve now and into the future," he said.
Shares of the UK's biggest defence contractor surged 6% in early trading, as analysts at Jefferies said the results were "solid," notably in free cash flow, which came in at 2.16 billion pounds.
BAE's stock has more than trebled since Russia invaded Ukraine in 2022, and have jumped 18% since the start of the year, giving the company a market value of about 60 billion pounds.
NATO SPENDING HIKES BOOST DEFENCE CONTRACTORS
The company, which won a Typhoon aircraft order from Turkey and a Type 26 frigates order from Norway last year, reported operating profit of 3.32 billion pounds ($4.5 billion) on sales up 10% to 30.66 billion pounds.
For 2026 it forecast 7-9% higher sales and 9-11% higher operating profit, with the latter matching its previous expectation for 2025.
Defence contractors, including BAE, have seen sharp increases in their share prices since 2022, driven by the prospect of more spending by NATO members.
The index of European defence stocks gained around 57% last year and started 2026 on a strong footing as sentiment was further buoyed by U.S. military action in Venezuela and Trump's comments on Greenland.
($1 = 0.7377 pounds)
(Reporting by Paul Sandle; Editing by Kate Holton and Bernadette Baum)
Key Takeaways
- •BAE Systems reported a 12% rise in operating profit.
- •Profit reached 3.32 billion pounds, exceeding expectations.
- •Global demand increased the order backlog to 83.6 billion pounds.
- •The financial performance was reported by Paul Sandle.
- •The article was edited by Kate Holton.
Frequently Asked Questions about UK's BAE Systems forecasts years of growth in ‘new era’ of defence spending, backlog hits record
1What is operating profit?
Operating profit is the profit a company makes from its core business operations, excluding any income derived from non-operational activities. It reflects the efficiency of a company's operations.
2What is an order backlog?
An order backlog is a list of orders received by a company that have not yet been fulfilled. It indicates demand for a company's products or services and can impact future revenue.
3What is the significance of demand in business?
Demand refers to the desire of consumers to purchase goods or services at a given price. High demand can lead to increased sales and revenue for businesses, impacting their overall profitability.
4What is the role of defense contractors?
Defense contractors are companies that provide products and services to military and defense organizations. They play a crucial role in national security by supplying weapons, technology, and support services.
