22nd May 2019 09:48
LONDON (Alliance News) - Shares in FTSE 250-listed engineering services firm Babcock International PLC fell Wednesday amid declines in profit and revenue and a weak outlook.
Shares in Babcock were 11% lower at 449.50 pence in early trade.
For the year ended March, pretax profit narrowed 30% to GBP235.2 million from GBP337.7 million the year prior after revenue fell 4.1% to GBP4.47 billion from GBP4.66 billion the year before.
Profit performance was also hurt by a rise in administration costs and GBP160.8 million in one-off charges related to impairments of the oil & gas unit, restructuring costs and pension charges.
Underlying pretax profit - excluding exceptional items - widened 1.1% to GBP517.9 million from GBP512.5 million the year prior.
Babcock Chief Executive Officer Archie Bethel said the firm had "delivered a robust performance" in which "we have sustained our strong margins and we have improved our cash generation."
"More importantly for the delivery of our strategic goals and our future performance, we have sharpened our focus on our three key markets of defence, aerial emergency services and civil nuclear," Bethel added. "We have strengthened our position in these areas with some important contract wins that partially offset the upcoming completion of the QEC contract and the loss of the Magnox contract and we have delivered further growth in our international businesses. In addition, we have exited low margin businesses outside of the three focus markets, which do not have synergy with the rest of the group, and we have reshaped our oil and gas business."
Bethel also emphasised that the firm had enhanced its "balance sheet strength" by reducing net debt 14% to GBP957.7 million from GBP1.12 billion the year prior.
Babcock proposed a 22.90 pence per share final dividend, up 1.1% from 22.65p the year prior. For the full year, the dividend rose 1.7% to 30.00p from 29.5p the year before.
"As we begin the new financial year we do not expect the wider market environment to be any less challenging than we have experienced this past year," Bethel cautioned. "However, Babcock's strength continues to be our focus, our position as a trusted partner in critical, complex areas of national importance, in both the UK and internationally, and our knowledge and expertise."
In financial 2020, Babcock expects underlying revenue to be around GBP4.9 billion with underlying operating profit between GBP515 million and GBP535 million. In financial 2018, the firm generated GBP588.4 million operating profit on revenue of GBP5.16 billion.
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