Babcock International dips despite remaining "on track"
Babcock International said it was on track to meet its full- and half-year forecasts despite defence sector softness as the engineer continued to experience strong demand from existing clients in its marine and support services divisions.
Babcock International Group
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08:19 23/04/24
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A trading statement from the FTSE 100 company on the day of its annual shareholder meeting revealed the order book remained stable at the £20bn seen in mid-May, with 84% of revenue for the full year and 60% of revenue for 2016/17 in place.
"We continue to experience strong demand for the critical services we provide to our customers through existing contracts, and business development remains active in our key markets," Babcock said.
The bid pipeline has also remained stable at around £10.5bn, and the tracking pipeline continues to provide significant longer-term opportunities for growth.
Having previously warned of lower first-half revenue at the defence and security division, the group's smallest revenue contributor in the last full year, this arm is now expected to grow by a "low single digit" for the full 2015/16 financial year as it benefits from the anticipated award of the UK Military Flight Training System (MFTS) fixed wing programme in the third quarter.
The acquisition of the Defence Support Group (DSG) from the UK Ministry of Defence, which was completed in April, has integrated well and has already secured a contract to overhaul 116 Latvian armoured land vehicles.
Marine continued to make good progress, with a strong performance by the naval marine business from growth in warship refit programme, with increased levels of activity in Australia, a £120m Canada submarine contract and a first significant offshore wind farm contract.
The support services division has shown "good revenue growth" that is expected to continue through the financial year, largely driven by the Magnox nuclear waste contract and additional work from the transfer of nuclear fuels from Dounreay to Sellafield worth around £250m.
The international division has successfully retained all 12 existing contracts which came up for rebid in the period.
Shares in Babcock were down 2.89% to 1,009p at 0914 BST on Thursday.