17th Jul 2024 10:25
(Alliance News) - Babcock International Group PLC on Wednesday said it its design was now more mature as it expect to report a jump in underlying operating profit.
The company said revenue in the financial year that ended March 31 was flat at GBP4.4 billion. Underlying operating profit however shot up 34% to GBP237.8 million from GBP177.9 million, which Babcock said reflected strong operating performance, especially in the Nuclear, Land and Aviation sectors.
Less positively, said the outturn over the lifetime of a contract to build five Royal Navy ships has deteriorated by GBP90 million, and this will be fully recognised in the financial 2024 results. Babcock said the contract to build the Type 31 general purpose frigates is the last material legacy onerous contract that it is managing.
Babcock proposed a final dividend of 3.3 pence per share, bringing the total to 5.0p, compared to no payout for financial 2023. Underlying free cash flow improved to GBP160.4 million in the past year from GBP75.3 million in financial 2023, and net debt excluding leases was reduced to GBP210.9 million from GBP346.2 million.
Babcock is a London-based defence and nuclear engineering services company, and the second-largest contractor to the UK Ministry of Defence behind BAE Systems PLC.
"Our operational improvement programme is facilitated by the fact that the design is now more mature. Although this has increased the volume of work, the design maturity has allowed us to target improvements in productivity and ongoing support costs as well as benefitting prospective export sales of our Arrowhead 140 design," Babcock said.
The company expects to release its full annual results on Friday next week.
Babcock shares were down 2.4% to 525.36 pence each on Wednesday morning in London.
By Tom Budszus, Alliance News slot editor
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