February 18th, 2026

The call presented a strong operational and financial performance in 2025: record sales, double-digit EBIT growth, robust order intake (GBP 37bn) and an all-time backlog (GBP 84bn), supported by heavy investment in R&D and capacity and a strengthened balance sheet. Key growth engines (P&S, Air, ES and MBDA) demonstrated notable momentum and management provided constructive guidance for 2026 (sales +7% to +9%; EBIT +9% to +11%). Principal risks highlighted were cash-flow timing volatility driven by customer advances, higher expected tax rates, and lower early-stage maritime margins. On balance the positives—in particular high-quality backlog, margin expansion, strong free cash conversion in 2025 and continued strategic investment—outweigh the operational and timing headwinds.

Company Guidance

Guidance for 2026 signals continued strong growth and cash generation: group sales are guided to rise 7–9% (air and Platforms & Services 9–11%; Electronic Systems 6–8%; maritime and cyber mid‑single digits), underlying EBIT/profitability is expected to grow 9–11% (driving EPS growth of 9–11%), and free cash flow is expected to exceed GBP 1.3 billion (guidance excludes material advance receipts and assumes an approximate GBP 600 million unwind of advances in 2026); the company also set a 3‑year (2026–28) cash target to exceed GBP 6 billion (vs. GBP 7.3 billion delivered in 2023–25). These targets sit on a record backlog of GBP 84 billion (~3x annual sales) and a broader incumbents/pipeline of ~GBP 260 billion (~9x sales), with FY25 metrics including GBP 30.7 billion sales, GBP 37 billion orders (book‑to‑bill 1.2), GBP 3.3 billion EBIT (10.8% margin, +20bps), GBP 2.2 billion free cash flow, CapEx close to GBP 1 billion (averaging ~GBP 1 billion p.a., >GBP 4 billion since 2020), record self‑funded R&D (up ~70% since 2020), FY25 shareholder returns of GBP 1.5 billion and a 10% dividend increase, net debt down 22% to GBP 3.8 billion (net debt/EBITDA 0.9x ex‑leases) and a Moody’s upgrade to A3.