Senior executives outlined the production expansion during BAE Systems’ first-half 2026 earnings call. Management said internal investment remained a priority as the group worked through an £84 billion order backlog.
Chief Financial Officer Brad Greve said BAE Systems was favouring organic investment over acquisitions at current market valuations. “Our priority is investing internally, you’re seeing higher CapEx, you’re seeing higher R&D,” he said.
The U.S. business has invested more than $4 billion in facilities and its workforce since 2020. The spending added 2 million square feet of capacity and increased the workforce by about 14%, according to Tom Arseneault, President and CEO of BAE Systems Inc.
BAE Systems expects U.S. capital expenditure to increase 40% year over year. Arseneault said the increase would be driven largely by an acceleration in munitions production.
The company has also approved another $250 million for capital projects within its Electronic Systems business. The spending will support production increases for THAAD, AMRAAM and Tomahawk programmes.
Europe is another major focus for capacity investment. Chief Executive Charles Woodburn said European sales increased 30% in the first half, while the region accounted for 33% of the group’s backlog but 13% of sales.
“To support our customers as they look to rebuild defense readiness, we’re investing to support increased capacity, efficiencies, and enhanced capabilities,” Woodburn said. He identified MBDA as a major part of that strategy.
MBDA plans to invest €5 billion between 2026 and 2030. Woodburn said the programme would modernise manufacturing sites, expand production capacity, strengthen supply chains and support new technologies.
The missile business secured €6.5 billion of orders during the first six months of 2026. Its backlog reached €48 billion, equal to almost eight times annual revenue.
Integrated air and missile defence is driving part of the near-term expansion. “There, frankly, we could sell whatever we had available and more,” Woodburn said.
Woodburn said near-term investment was being directed towards missile-defence production capacity. He specifically cited interceptors designed to counter ballistic missiles.
BAE Systems is also increasing manufacturing capacity in Sweden. Investments at Hägglunds are expected to result in a 400% increase in production, Arseneault said.
At Bofors, production rates have already increased three- to fourfold across several product areas. Arseneault said the business was acquiring new facilities and expanding production lines amid higher demand for artillery and munitions.
The company also acquired a Swedish supplier of precision mechanics and component machining products in May. Arseneault said the acquisition would strengthen Bofors’ supply chain and support increased deliveries of core systems.
