Defence giants Rolls-Royce and BAE Systems lift profit outlook on rising military budgets

Rolls-Royce and BAE Systems each revised upward their profit projections after a wave of defence-budget expansions across multiple countries. The aerospace and marine engine maker now expects underlying operating profit of £4.7-£4.9 billion for the year, up from a prior range of £4-£4.2 billion, and raised its free-cash-flow forecast to £3.8-£4 billion. Growth is attributed to heightened demand for combat-plane engines, naval turbines, small nuclear reactors for data-centre power and a rebound in civilian jet engine sales.

BAE Systems lifted its earnings growth outlook to 10-12%, citing higher spending in the United Kingdom, the United States, Gulf allies and a new Turkish Typhoon support contract, as well as a US deal to accelerate production of THAAD missile seekers and a £5.9 billion contract for the HMS Dreadnought submarine. CEOs Tufan Erginbilgiç and Charles Woodburn both emphasized the companies’ strategic progress and the sustained, volatile threat picture driving government spending. Rolls-Royce shares jumped 5.5% on the news, making it the top gainer on the FTSE 100, while BAE highlighted its diversified geographic footprint and strong order backlog as foundations for long-term growth.