BAE Systems raises 2026 outlook after 11% profit jump

BAE Systems on Thursday raised its full-year 2026 outlook after reporting an 11% increase in first-half profits, while German rival Rheinmetall posted preliminary second-quarter results that blew past analyst expectations, underscoring the windfall flowing to Europe's defense sector as governments ramp up military spending.

BAE Lifts Sales Forecast

The British defense contractor now expects sales growth of 8% to 10% for 2026, up from its previous guidance of 7% to 9%, according to The Wall Street Journal News Corp ↘ 1.67%. The company reported first-half sales of £15.77 billion and underlying earnings before interest and taxes of £1.70 billion, with an order backlog reaching £84 billion. BAE attributed the upgrade to increased defense budgets from governments responding to heightened global threat levels.wsj+2

The raised guidance mirrors a pattern from 2025, when BAE similarly upgraded its outlook at the half-year mark after strong operational performance. The company had previously reported full-year 2025 sales of £30.66 billion.bloomberg+1

Rheinmetall Smashes Estimates

Rheinmetall delivered preliminary second-quarter operating profit of €562 million, nearly 20% above the market consensus of €469.9 million, while revenue surged approximately 69% year-over-year to €3.29 billion. The German company also disclosed that its order backlog surpassed €80 billion during the quarter after securing €11.37 billion in new nominations, including contracts for loitering munitions from the German armed forces and a major order package from Romania.investing+2

Shares of Rheinmetall, which trades on the DAX, rose more than 6% following the announcement.rttnews

Defense Spending Trajectory

The results from both companies reflect a broader trend of rising military budgets across NATO and allied nations in response to geopolitical tensions. Industry analysts suggest the upward revisions indicate a strong trajectory not just for individual firms but for the defense sector as a whole. BAE had confirmed as recently as May that it was seeing increased defense expenditures across all its primary markets, a trend that has now translated into upgraded financial targets.devdiscourse+1