BAE Systems Sees Record Growth as Global Military Spending Surges

Rising Defence Budgets Drive BAE’s Historic Order Backlog

As global tensions rise, defence giant BAE Systems has reported record-breaking orders worth £33.7 billion, solidifying its position as a leader in the arms industry. The company’s order backlog has hit £78 billion, thanks to increasing military budgets worldwide, driven primarily by conflicts such as Russia’s invasion of Ukraine and NATO’s commitment to strengthening defence capabilities.

Strong Financial Performance in 2024

BAE’s 2024 results exceeded expectations, with:

• 14% increase in underlying earnings to over £3 billion
• 14% revenue growth to £28.3 billion
• £2.5 billion in free cash flow, significantly surpassing estimates due to advance customer payments

The steady rise in defence spending has made BAE one of the biggest beneficiaries of heightened global security concerns.

Key Contracts Fuelling Growth

BAE’s record-breaking orders stem from major contracts, including:

• Fighting vehicles: Demand for Swedish-made CV90 fighting vehicles continues to rise
• Warships: Key contracts secured in Australia
• Eurofighter Typhoon aircraft: New orders from Spain and Italy
• Munitions and weapons systems: High demand from NATO and allied nations

CEO Charles Woodburn stated that BAE expects sales to grow by 7-9% in 2025, with earnings projected to rise by 8-10%.

Defence Stocks Continue to Soar

BAE’s stock, along with other European defence stocks, has surged since Russia’s full-scale invasion of Ukraine in 2022. Although shares dipped slightly after a more modest financial outlook for 2025, analysts remain optimistic due to long-term investment in defence projects.

The Future of BAE in a Rapidly Expanding Military Market

With NATO countries increasing their defence budgets, BAE expects further investment opportunities. Woodburn anticipates that NATO’s spending targets will continue to rise, ensuring steady demand for advanced military systems.

Additionally, BAE’s involvement in long-term defence alliances—such as the AUKUS submarine pact (UK, US, and Australia) and next-generation fighter jet programs—provides the company with significant revenue visibility.

Conclusion: How BAE Benefits from the Shifting Global Landscape

With military spending increasing globally, BAE is poised for continued growth. As geopolitical tensions escalate, nations are prioritising defence innovation and preparedness, ensuring BAE remains a key player in the evolving security landscape.

Looking ahead, as more nations bolster their armaments and defence capabilities, BAE is in a prime position to capitalize on these rising investments. If tensions between Ukraine and Russia persist, along with other global conflicts, demand for advanced weaponry, naval systems, and aircraft will likely continue to grow, solidifying BAE’s dominance in the defence sector.

Sources: (FT.com, ChatGPT)