Our Annual Report showcases the highlights of our performance, strategy and results from 2025. Our latest report outlines key results, projects and the strengths and resources BAE Systems has delivered over the last year helping us to provide opportunities to create sustainable value for our stakeholders.
By focusing on operational excellence and innovation, we have consistently delivered cutting-edge technologies, helping our customers stay ahead of evolving threats.
Charles Woodburn CBEChief Executive
This has been another busy year, with strong operational and financial performance. The Board has been especially pleased that several major international programmes have reached signficant milestones.
Cressida Hogg CBEChair
At BAE Systems, we provide some of the world’s most advanced, technology-led defence, aerospace and security solutions. We are a workforce of 111,400 highly skilled people in more than 40 countries. Working with our customers and local partners, we develop, engineer, manufacture and support products and systems that deliver military capability, protect national security and keep critical information and infrastructure secure. We maintain leading positions in major defence and security markets around the world – including the US, UK, Europe, the Kingdom of Saudi Arabia and Australia – as well as established positions in a number of other international markets.
Read more on page 3 of the Annual Report.
We focus our operations across five key sectors.
Electronic Systems
Electronic Systems comprises our US- and UK-based Electronic Systems business and our US-based Space & Mission Systems business. Key capabilities span electronic warfare systems, navigation systems, electro-optical sensors, military and commercial avionics, precision guidance solutions and communications systems, as well as space electronics, spacecraft, ground and tactical systems.
Demand was strong across our Electronic Systems customer base in 2025, as evidenced by our order intake. We supported customers on key electronic warfare and precision-guided munition programmes, while pursuing and maturing innovative capabilities. In commercial avionics, airline traffic continues to grow globally, resulting in stronger demand for our OEM products and aftermarket services.
Read more about Electronic Systems on page 38 of the Annual Report.
Platforms & Services
Platforms & Services, with operations in the US, Sweden and the UK, manufactures and upgrades combat vehicles, weapons and munitions, and delivers services and sustainment activities, including US naval ship repair and the management and operation of two government-owned, contractor-operated ammunition plants.
With a strong order backlog across our diverse portfolio of innovative products and services, we remain dedicated to delivering on our customer commitments, driving operational excellence and investing in infrastructure to maintain a solid foundation for sustained growth. We continue to scale our Combat Mission Systems and Maritime Solutions (formerly US Ship Repair) divisions to support the US maritime industrial base, enhancing our manufacturing capabilities by upgrading welding, machining and heavy-lift capacity to support submarine construction and component fabrication.
Read more about Platforms & Services on page 40 of the Annual Report.
Image credit: US Army.
Air
Air comprises the Group’s UK‑based aircraft build and support activities for European and international markets, US programmes, development of our Future Combat Air System and FalconWorks®, alongside our business in the Kingdom of Saudi Arabia and interests in our joint ventures: Edgewing, Eurofighter and MBDA.
We continue to work with our UK and international customers to support their existing platforms and provide new enhanced capabilities. Deliveries of Typhoon aircraft to Qatar were completed in the year, alongside support to the in-service fleet. Our US Programmes business remains focused on delivery execution across all production lines. Our Future Combat Air Systems and FalconWorks® organisations continue to invest in our people, facilities and cutting-edge technologies to deliver disruptive capabilities to our customers.
Read more about Air on page 42 of the Annual Report.
Maritime
Maritime comprises the Group’s UK‑based maritime and land activities, including ship build and support activities, major submarine build programmes, as well as our Australian business and interest in our RBSL joint venture.
Our major Maritime platforms continue to progress through their long-term programmes. With five of the seven Astute Class submarines delivered to the Royal Navy, work continues on the remaining two boats and on the construction on the four Dreadnought Class submarines. We also continue to deliver in accordance with our SSN-AUKUS contracts. Construction of the initial five UK Type 26 frigates continues and more than half of the units on the first Australian Hunter Class frigate are in production.
Read more about Maritime on page 44 of the Annual Report.
Cyber & Intelligence
Cyber & Intelligence comprises our US‑based Intelligence & Security business and UK‑headquartered Digital Intelligence business and covers the Group’s cyber security activities for national security, central government and government enterprises.
Our US-based Intelligence & Security business delivered a solid performance, despite shifting government priorities, a competitive defence technology landscape and some programme furloughs due to the US Government shutdown. We stayed aligned to evolving customer customer and national security requirements to drive faster, cost-effective and resilient outcomes. Our UK-based Digital Intelligence business, continues to work collaboratively to collect, connect and understand complex data for governments, nation states, armed forces and commercial businesses in both the UK and international markets.
Read more about Cyber & Intelligence on page 46 of the Annual Report.
1. Sales is defined in the alternative performance measures section on page 216 of the Annual Report.
2. As at 31 December 2025 and including share of equity accounted investments. Total figure of 111,400 includes HQ employees of 3,900.
We hold a record order backlog of £84bn and our strong order intake for the year demonstrates the continued relevance of our diverse geographic footprint and multidomain capabilities.
Brad GreveChief Financial Officer
Read more in our Financial review on page 30 of the Annual Report.
We monitor the underlying financial performance of the Group using alternative performance measures (APMs). These measures are not defined in IFRS and, therefore, are considered to be non-GAAP measures. The purpose and definition of our APMs can be found on page 216 of the Annual Report.
Sales (£m)
£30,662m
10% growth3
Underlying EBIT (£m)
£3,322m
12% growth3
Underlying EPS (p)
75.2p
12% growth3
Free cash flow (£m)
£2,158m
£347m lower
Order intake (£bn)
£36.8bn
£3.1bn increase
Order backlog (£bn)
£83.6bn
£5.8bn increase
3. Growth rates for Sales, Underlying EBIT and Underlying EPS are on a constant currency basis (i.e. current year compared with prior year translated at current year exchange rates). The comparatives have not been restated. All other year-on-year movements are on a reported currency basis.
As the threat environment becomes more dynamic and military budgets need to work harder, we are continuing to invest in key technology areas to support the complex requirements of our customers. We drive innovation through a multi-faceted approach, which includes evolving our portfolio through technology-focused acquisitions, increasing our self-funded R&D and leveraging collaborations with partners and academia. This strategy enables us to rapidly develop and deliver new technology to our customers today. We also invest in research that could provide step-changes in future capability and identify technology that can help us become more efficient.
Read more on page 24 of the Annual Report.
Technology to protect today
We address urgent customer needs for advanced military technology to counter evolving threats. In 2025, we advanced key areas and deployed our technology at the heart of customer operations around the world. We bolstered our electronic warfare capabilities, critical to maintain communications between our customers’ assets and allies.
We deployed our latest software-defined radios on the US Army’s rotary-wing fleet to resist jamming. We developed a new command and control system to automate intelligence gathering and detect drones. Additionally, we are exploring AI-based enhancements to our INTeACT™ Combat Management System which helps the Royal Navy by connecting sensors to identify, prioritise and respond to missile and drone threats.
Pioneering future innovation
Many of our customers want affordable, attritable uncrewed products to complement their force mix, working seamlessly with both crewed and more advanced uncrewed assets while requiring minimal logistical effort. We have long been developing systems that can share data, intelligently plan and execute missions with minimal human control.
Having already demonstrated autonomous vehicles on land, sea and air, we continue to innovate, aiming to deliver powerful, easy-to-operate platforms that integrate with both our own and third-party systems. We have established a common autonomy and control architecture to underpin this goal.
Technology for efficiency
While global defence budgets are increasing in response to growing threats, so are the demands. So, it is incumbent on industry to maximise efficiency in development, production and operational costs, while innovating faster, delivering more quickly and strengthening supply chain resilience.
We work with a range of partners, including the Digital Catapult and Advanced Manufacturing Research Centre in the UK, so that improvements in our own processes can also benefit others. Some efficiencies could also result in performance improvements, offering greater product endurance or even speed.
We are committed to investing in our people and having a positive impact on the communities where we operate.
Investing in our people
Our people are at the heart of everything we do, from advancing the next generation of defence and security solutions to making a difference in the communities where we operate. That is why we are committed to investing in the skills of both our current and future workforce and to creating inclusive workplaces that attract, develop and retain the very best talent.
In 2025, we grew our workforce by 4% and invested in education, training and skills to strengthen the ability of our workforce to drive innovation, business performance and growth. Since 2020, we've invested over £1bn in the UK, as we develop the next generation of talent.
Read more on page 50 of the Annual Report.
Supporting our communities
We are dedicated to making a meaningful difference in the communities where we live and work, focusing on areas that align with our values and business priorities. This includes supporting the armed forces and inspiring the next generation through our Science, Technology, Engineering and Mathematics (STEM) education outreach programmes.
Through donations, fundraising, volunteering and working closely with our charitable partners, our community investment initiatives aim to create lasting impact. In 2025, we donated £12.2m to community and charitable projects and 36,182 hours of employee volunteering time.
Read more on page 54 of the Annual Report.
Our decarbonisation strategy aims to mitigate the potential impacts of the material transition risks we have identified by underpinning business operations, growth and resilience and delivery of capability to our customers. Our decarbonisation strategy includes:
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taking action to reduce our operational GHG emissions in support of our Scope 1 and 2 GHG emissions reduction targets;
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supporting our customers on their climate plans by developing energy efficient products and services while maintaining military operational advantage;
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engaging suppliers across markets on their decarbonisation programmes;
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engaging and developing the skills and capabilities of our employees to drive innovative solutions for energy management and resource efficiency across our operations and the product lifecycle;
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seeking to mitigate adverse environmental impacts and being good stewards of the environment in the locations where we operate; and
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partnering and collaborating with defence peers, through industry associations, and with academia and government to address climate and environment matters.
Read more on page 56 of the Annual Report.
Our industry is among the most highly regulated of any sector. Our global Operational Framework sets out our approach and the mandated policies and processes which apply across all wholly-owned entities. Our global Code of Conduct lays out the standards and behaviours that we expect of all employees and outlines the ways in which anyone can seek help and guidance. Our Code is supported by a training and engagement programme.
Read more on page 59 of the Annual Report.
Explore how we put our strategy into practice this year, with case studies showing how we are maintaining and growing our core franchises and securing growth opportunities through advancing our strategic priorities to: drive operational excellence; continuously improve competitiveness and efficiency; and advance and further leverage our technology.
US missile defence priority
Space superiority has emerged as a critical component in global defence strategies, prompting decision-makers to focus on the rapid development of advanced space-based capabilities to deter and counter evolving threats. The US Government has prioritised the deployment of a next-generation missile defence shield to achieve a strategic advantage in space and maintain national security.
In May 2025, we secured a $1.2bn (£0.9bn) prime contract for the US Space Forces’ Resilient Missile Warning and Tracking Medium Earth Orbit Epoch 2 programme. Under this landmark award, we will deliver a constellation of satellites to provide comprehensive, space-based missile warning and tracking capabilities around the world to empower swift and effective decisions in high-stakes scenarios.
By using the Trek variant of our ElevationTM product line, the satellites can be produced more affordably and at scale with high-performance manoeuvrability and onboard data processing. By developing the spacecraft bus and payloads, and managing ground support, operations and sustainment, we are leveraging our capabilities to deliver end-to-end mission solutions for the military space market.
FalconWorks® accelerating possibilities
As one of the leading designers, developers and suppliers of military uncrewed air systems (UAS) in Europe, FalconWorks, our advanced research and technology hub in our Air sector, has developed a comprehensive and fast-evolving range of cutting-edge uncrewed capabilities.
Our UAS portfolio is a testament to the power of collaboration and innovation. Leveraging our expertise, R&D investment and strategic acquisitions, along with academic, SME (small and medium-sized enterprise) and specialist supplier collaborations, we have created a range of core vehicle categories designed to offer customers cost-effective choice and variable payloads.
By bringing specialist companies like Malloy Aeronautics, Prismatic and Callen-Lenz into our portfolio, we are accelerating the development of next-generation capabilities that will help shape the future of air power. We seek to retain their agility and creativity, while unlocking access to our engineering expertise, manufacturing know-how and funding support to help them achieve their full growth potential. Together, we are delivering innovative, agile and cost-effective solutions that meet the evolving needs of our customers.
Norway Type 26 frigate
In a significant development for European collaboration, Norway selected our Type 26 frigate in August for its future warship procurement programme.
The £10bn government-to-government agreement paves the way for the UK’s largest ever warship export deal by value. Providing a major boost for UK shipbuilding, this landmark achievement will sustain thousands of jobs in Scotland and across the UK supply chain well into the next decade.
The agreement followed the official opening of the Janet Harvey Hall earlier in the year. Enabling the simultaneous construction of two Type 26 vessels side-by-side under cover, this state-of-the-art facility enhances production efficiency and enables us to deliver advanced warships at pace for the UK and its allies.
As announced, under the defence cooperation agreement, Norway will operate at least five Type 26 ships alongside the Royal Navy’s eight vessels. Hailing the deepening of a long-term strategic relationship between the UK and Norway, the combined fleet of 13 anti-submarine warfare frigates will detect, classify, track and defeat hostile submarines – significantly reinforcing NATO’s northern flank.
Typhoon for Türkiye
The Typhoon programme reinforced its standing as one of the UK’s most successful defence exports when Türkiye announced it would become the aircraft’s tenth operator.
The deal, anticipated to be worth £4.6bn to BAE Systems, marks a new chapter in our longstanding relationship with this important NATO ally. Ensuring UK Typhoon production continues into the 2030s, the contract provides a vital bridge towards production of Tempest, the UK’s next-generation fighter jet, which we are developing with our GCAP partners.
Under the agreement with the UK Government, Türkiye will acquire 20 Typhoon aircraft, boosting NATO interoperability as it joins the UK, Germany, Spain, Italy, Austria, Oman, Qatar, Kuwait and the Kingdom of Saudi Arabia as an operator of this world-class aircraft.
Typhoon production sustains more than 20,000 jobs across the UK and delivers substantial economic returns, with the original £12bn government investment, having already generated more than £30bn for the UK economy.
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All numbers are correct as at 31 December 2025 and include our share of equity accounted investments.
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Please refer to the cautionary statement in the full BAE Systems Annual Report 2025 for further information on forward-looking statements.