Britain’s biggest weapons manufacturer, BAE Systems, has reported record orders as the European defence industry gears up for increased spending sparked by the Ukraine war.
The company, a member of the FTSE 100, said it expected sales next year to top £30bn, as it reported annual profits before interest and tax of more than £3bn for the first time in 2024.
Weapons companies have benefited from a rush of spending in the three years since Russia invaded Ukraine, and they are gearing up for further increases as Europe and the UK, which is reviewing defence spending, scramble to adjust to Donald Trump’s signals that the US will withdraw much of its support.
The US was the key military backer of Ukraine’s resistance until Trump’s return to the White House. However, he blamed Ukraine for the war on Tuesday, and his administration held talks with Russia this week that excluded Ukraine, the EU and the UK.
Charles Woodburn, chief executive of BAE Systems, said the company was “waiting for some clarity” about the extent of European defence spending increases but that “given what’s happening, it’s going to be higher than it is today”.
BAE has a record £77.8bn backlog of orders. Its share price rose 1% on Wednesday morning to £13.50. The shares hit a record £14 last summer, and they have more than doubled in value over the three years since Vladimir Putin ordered Russia’s invasion of Ukraine, which has lifted the company’s value to more than £40bn.
Woodburn said Ukraine would “need to rebuild” its weapons and would “look to companies such as us” for items such as replacing worn out artillery barrels even if there was a peace deal.
BAE Systems will start producing 155mm artillery rounds on new production lines by the middle of this year, Woodburn said. The increase was ordered by the Conservative government in June 2023 after munitions stocks were depleted by donations to Ukraine. The new facilities and forges will increase total capacity eightfold.
Woodburn said that “clearly it’s feasible” for the UK to send Typhoon fighter jets, which are manufactured by a consortium including BAE Systems, to Ukraine. The Times reported on Tuesday that the UK was considering the move to help to secure any peace deal.
In the longer term, BAE Systems is a key part of the global combat air programme (GCAP), with the UK, Japan and Italy partnering to build a next-generation fighter jet. Yet France, Germany and Spain are making a rival fighter, the Future Combat Air System. Woodburn said he supported suggestions of greater collaboration on European fighter jet manufacturing.
The European manufacturer Airbus has repeatedly said it does not make sense to have two fighter jet programmes, and its chief executive, Guillaume Faury, told reporters in January that the two programmes should work more closely together, potentially on drones and communications systems that will integrate with the fighter jets.
Woodburn said: “For the unmanned assets there are opportunities. A little bit depends on the willingness of our governments to work together.
“As GCAP progresses it does get harder to change the makeup of the team,” he added, although there would still be opportunities for other countries to join “in the next couple of years or so”.
