22nd Jun 2026 08:14
(Alliance News) - Babcock International Group PLC on Monday backed its guidance for the current financial year and reiterated medium-term targets, despite reporting lower annual profit after taking a charge on its Type 31 frigate programme.
The London-based defence company said pretax profit in the year ended March 31 fell 14% to GBP283.7 million from GBP329.1 million a year prior, while diluted earnings per share declined to 41.3 pence from 48.0p.
Revenue, however, rose 7.2% to GBP5.18 billion from GBP4.83 billion, driven by strong performances in its Nuclear and Aviation businesses.
Babcock increased its total dividend by 15% to 7.5p per share from 6.5p, including a final dividend of 5.0p, up from 4.5p.
The company said underlying operating profit fell to GBP293.3 million from GBP362.9 million after a GBP140.0 million charge relating to its Type 31 frigate contract.
Excluding the charge, underlying operating profit rose 19% to GBP433.3 million and underlying operating margin improved to 8.2% from 7.5%.
Chief Executive Officer David Lockwood said: "Against an increasingly uncertain geopolitical backdrop, Babcock has delivered continued strategic and operational progress. We achieved strong underlying growth, improved margins and robust cash generation, while securing important contract wins that further strengthen our position in defence and nuclear markets, where long-term demand is increasingly structural."
Underlying free cash flow jumped 71% to GBP261.8 million from GBP153.4 million, while net debt narrowed to GBP329.0 million from GBP373.3 million.
Babcock said expectations for financial 2027 are unchanged and it anticipates "another year of good progress", supported by strong revenue visibility with around 70% of expected revenue already under contract as of April 1.
The company also reaffirmed its medium-term targets of average mid-single-digit organic revenue growth, an underlying operating margin of at least 9%, and average underlying operating cash conversion of at least 80%.
Babcock completed a GBP200 million share buyback in April and announced a further GBP200 million programme to be completed during financial 2027.
Shares in Babcock International were down 4.1% at 1,003.50 pence in London on Monday morning.
By Eva Castanedo, Alliance News reporter
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