6th Apr 2020 11:18
(Alliance News) - Babcock International Group PLC said Monday trading in the final quarter of financial 2020 was in line with internal expectations.
The engineering firm said the Covid-19 outbreak had a "small impact" on its trading in the three months ended March 31.
"While the vast majority of our services continue, some areas of the business are running at reduced levels, including short cycle work and some training and transportation activities. Where services continue, priority is being given to critical programmes," Babcock said.
The company said its Aviation business saw reduced primary flying hours in Italy and Spain in the quarter, as national lockdowns resulted in fewer emergency missions.
This was partly offset by an increase in secondary flying hours, Babcock said, as it transferred patients between hospitals to alleviate congestion as the pandemic spread.
"While we have a strong short and long term order book, the impact of Covid-19 for the next financial year is uncertain," Babcock added.
The company continued: "We continue to model a range of scenarios and stress tests as circumstances evolve, and more information on the impact of Covid-19 becomes available, and will provide an update with our full-year results."
Babcock is scheduled to release its annual results on May 27.
To mitigate this, the engineer said it is taking "action". This includes reducing and deferring non-essential operating and capital expenditure. Babcock said it may also seek government aid to help "manage areas of inactivity".
Babcock also said it will "consider" its final dividend, taking into account how the virus develops over the next two months.
Babcock said its primary concern is looking after the strength of its cash flow and balance sheet. The company has access to GBP2.4 billion of borrowing facilities - including the GBP775 million revolving credit facility it has fully drawn to combat the "current uncertainty".
The company noted its net debt to Ebitda ratio is "well within" its covenant levels of 3.5 times.
Babcock also noted it has been awarded a contract by the UK Cabinet Office to manufacture 10,000 Zephyr Plus ventilators.
Shares in Babcock International were 5.3% higher in London on Monday at 361.75 pence.
By Paul McGowan; [email protected]
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