half-year results
Our diverse portfolio, together with our focus on programme execution, cash generation and efficiencies are helping us navigate the current macroeconomic challenges and position us well for sustained top line and margin growth in the coming years. We see further opportunities to enhance the medium- and long term outlook as our customers commit to increased defence spending to address the elevated threat environment. The positive outcome of the UK pension triennial review, along with our performance and confidence in the outlook enable us to maintain our guidance, continue to invest in our business and progress our ESG agenda whilst increasing returns to our shareholders. Good operational performance, execution on our strategy and confidence in the outlook enables us today to announce a 5% increase in the interim dividend as well as initiating a new, three-year share buyback programme for up to £1.5bn. Charles Woodburn, Chief Executive
Financial performance measures as defined by the Group
  Six months
30 June
Six months
30 June
31 December
Sales £10,581m £10,035m £21,310m
Underlying EBIT  £1,112m £1,028m £2,205m
Underlying earnings per share
excluding one-off tax benefit (2021 only)



including one-off tax benefit (2021 only) 24.5p 24.8p 50.7p
Free cash flow £123m £461m £1,864m
Net debt (excluding lease liabilities) £(3,135)m £(2,745)m £(2,160)m
Order intake £17,985m £10,582m £21,458m
Order backlog £52.7bn £44.6bn £44.0bn
Financial performance measures derived from IFRS
  Six months
30 June
Six months
30 June
31 December
 Revenue £9,739m £9,339m £19,521m
 Operating profit £1,028m £1,303m £2,389m
 Basic earnings per share 19.6p   31.3p


 Net cash flow from  operating activities £493m £623m £2,447m
 Order book £42.5bn £35.5bn £35.5bn
 Dividend per share 10.4p 9.9p


Group’s share of the net post-employment benefits surplus/(deficit) £0.9bn £(2.4)bn £(2.1)bn

Financial highlights

Financial performance measures as defined by the Group
  • Sales increased by 2.8% on a constant currency basis to £10.6bn.
  • Underlying EBIT of £1,112m increased by 4.4% on a constant currency basis.
  • Underlying earnings per share increased by 11.9% to 24.5p, excluding the impact in 2021 of the one-off tax benefit. The Group’s underlying effective tax rate for the first half of the year was 19%.
  • Free cash inflow of £123m (2021 £461m inflow, including £250m receipt in respect of the Filton and Broughton site disposals).
  • Net debt (excluding lease liabilities) at £3,135m (£2,160m at 31 December 2021).
  • Order backlog of £52.7bn (£44.0bn at 31 December 2021).
Financial performance measures derived from IFRS
  • Revenue increased by 4.3% to £9.7bn.
  • Operating profit decreased by 21.1% to £1,028m.
  • Basic earnings per share decreased to 19.6p (2021 31.3p).
  • Net cash inflow from operating activities of £493m (2021 £623m inflow).
  • Order book of £42.5bn (£35.5bn at 31 December 2021).
The directors have declared an interim dividend of 10.4p per share in respect of the half year ended 30 June 2022. This dividend will be payable on 30 November 2022. The directors have also approved a new share buyback programme of up to £1.5bn over the next three years, which will commence immediately.
Post-employment benefits
The Group’s share of the accounting net post-employment benefits obligations has improved by £3.0bn moving from a deficit as of 31 December 2021 of £2.1bn to a surplus of £0.9bn, which is presented after deducting withholding tax which would be levied prior to the future refunding of any surplus.

Operational and strategic key points

  • Closely engaged with our global customers to provide on-going support wherever requested.
  • Delivering on programme specific mission critical requirements of our customers.
  • Kept an agile and flexible business response to the ever-evolving situation.
  • Focus remained on employee safety and well-being whilst maintaining delivery on our customer commitments.
Group Portfolio actions
  • UK Triennial pension review completed.
  • Acquisition of Bohemia Interactive Simulations (BISim) completed in March.
  • Agreement signed in July for the sale of BAE Systems’ financial crime detection business from Cyber & Intelligence, with completion expected in the next few months.
  • Reflecting the changes in operational reporting lines effective from the beginning of the year, the BAE Systems Australia business has moved from being reported in the Air segment to the Maritime segment. Additionally, the Group has established a new Digital Intelligence business, bringing together the non-US digital and data capabilities to further strengthen how we deliver these services and capabilities to our customers. Digital Intelligence is reported within the Cyber & Intelligence segment.
Electronic Systems
  • Cumulatively, over 1,100 electronic warfare systems have been delivered on the F-35 programme.
  • Deliveries continue of next-generation EW Eagle Passive Active Warning Survivability System to support upgrade of US Air Force F-15 platform and testing on F-15E and F-15EX test aircraft.
  • Awarded $176m (£145m) for Airborne High Frequency Radio Modernization programme.
  • Selected to design, test and supply energy management components for GE Aviation’s megawatt class hybrid electric propulsion system supporting NASA’s Electrified Powertrain Flight Demonstration project.
Platforms & Services
  • M109A7 programme is consistently delivering at full rate production levels and received a $299m (£246m) contract.
  • Deliveries of all five variants of Armored Multi-Purpose Vehicles to the US Army continue.
  • Amphibious Combat Vehicle deliveries to US Marine Corps continue, with design and development under way for new mission variants.
  • Bradley vehicle upgrade work continues on contracts for 459 vehicles.
  • BAE Systems Hägglunds is ramping to perform on multiple contracts for CV90 and BvS10.
  • CV90 wins Slovakia’s competitive evaluation for its Infantry Fighting Vehicle programme.
  • US Ship Repair profitability was significantly impacted by the COVID-19 pandemic, but continues to recover.
  • Production on F-35 is at full rate levels. 74 rear fuselage assemblies have been completed in the period.
  • The Qatar Typhoon and Hawk programme is progressing well. The first Typhoon deliveries will commence in the second half of 2022.
  • Work continues on the Typhoon programme and the production programme has been extended further following the award in June of 20 further aircraft for Spain.
  • The future electronically scanned European Common Radar Solution continues in line with the Typhoon plan.
  • The sector continues to work closely with industry partners and the UK government to continue to fulfil contractual support arrangements in Saudi Arabia.
  • The Future Combat Air System (FCAS) programme continues as anticipated with the initial Concept & Assessment Phase contract underway across national and international partners.
  • Saudi British Defence Co-operation Programme five-year renewal support funding agreed.
  • £2.5bn of further contract funding awarded as part of Delivery Phase 3 for the Dreadnought programme.
  • New Submarine Build Capability contract maintains BAE Systems' role as the lead for the design and build of nuclear submarines within the UK submarine enterprise.
  • The Submersible Ship Nuclear Replacement (SSNR) programme has moved into its Functional Design phase.
  • Ongoing support to the Royal Navy’s Portsmouth-based flotilla and the operation of HM Naval Base Portsmouth under the UK Ministry of Defence’s Future Maritime Support Programme, including support to the UK’s two aircraft carriers.
  • The Hunter Class Frigate programme in Australia continues to make strong progress through the prototyping phase.
  • HMAS Toowoomba, the fifth ANZAC Class frigate to move through the ANZAC Mid Life Capability Assurance Programme (AMCAP) was returned to the Australian Navy following successful completion of the dry production phase of AMCAP.
  • Mobilisation of the Challenger 3 and Mechanised Infantry Vehicle contracts secured by the RBSL joint venture is advancing well.
  • Transition to the Next Generation Munitions Supply Solution (NGMS) contract is ongoing.
Cyber & Intelligence
Intelligence & Security
  • Strong operational performance and integration of Bohemia Interactive Simulations progressing well.
  • Awarded an 18-year contract to continue supporting the sustainment of U.S intercontinental ballistic missiles (ICBMs).
  • Won a $699m (£575m), five-year contract for operations, maintenance, and management services for the US Army’s Defense Supercomputing Resource Center.
Digital Intelligence
  • Ongoing integration and transformation of the newly-formed business.
  • Increasing underlying profitability supported by strong programme execution, productivity and cost base optimisation.
  • Continued integration and growth of the acquired In-Space Missions business, a UK-based satellite and satellite systems company, to accelerate our space capabilities.
  • Repayment of £400m bond in June from existing resources.

Guidance for 2022

The Group’s full year 2022 guidance across all metrics is unchanged from that provided at the Preliminary announcement on 24 February 2022, which was provided on the basis of an exchange rate of $1.38:£1 for the year.

Sales                                           +2% to +4% (2021: £21,310m)
Underlying EBIT                            4% to +6% (2021: £2,205m)
Underlying EPS3                           +4% to +6% (2021: 47.8p)
2022 Free Cash Flow (FCF)            >£1bn
Cumulative FCF 2022-2024            >£4bn
Should the current dollar rate persist, this will be a tailwind to earnings with sensitivity to EPS being around 1 pence for every 5 cent movement.

The guidance is based on the measures used to monitor the underlying financial performance of the Group. Reconciliations from these measures to the financial performance measures derived from International Financial Reporting Standards for the six months ended 30 June 2022 are provided in the Group financial review on pages 12 to 18.

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Kristina Anderson
Director, Media Relations


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