26th Jul 2024 11:49
(Alliance News) - Babcock International Group PLC on Friday said it is making progress towards its medium-term ambitions as the global push towards rearmament boosts profit in financial 2024.
The London-based company is a provider of technical and engineering support services to customers in the defence and civil sectors.
In the year that ended March 31, Babcock said pretax profit increased to GBP216.7 million from GBP6.2 million the previous year. This was driven by improved performance in its Nuclear, Land, and Aviation sectors.
Revenue fell 1.1% to GBP4.39 billion from GBP4.44 billion, while operating costs reduced by 4.0% to GBP4.15 billion from GBP4.32 billion.
Babcock reinstated a final dividend of 3.3 pence per share, taking the total dividend to 5.0p from zero last year.
Babcock improved its underlying operating margins to 5.4% from 4.0%, and reduced net debt by 23% to GBP435.4 million from GBP564.4 million.
In financial 2023, the company incurred a loss on disposal and related items, as well as a GBP100.1 million loss relating to its contract with the UK Ministry of Defence for Type 31 frigates.
The contract further deteriorated by GBP90 million, which has been recognised in financial 2024 results.
Chief Executive Officer David Lockwood said: "Babcock is well positioned to benefit from the sustained uplift in global defence budgets, driven by the need to recapitalise, re-equip and modernise militaries, resulting in an increase in our opportunity set."
The company said it entered the current financial year in a strong position, with 70% of expected revenue already under contract at April 1.
Management expects to deliver, in the medium-term, mid-single digit average annual revenue growth and underlying operating margins of at least 8%.
Babcock shares were up 5.6% at 515.04 pence each in London on Friday morning.
By Elijah Dale, Alliance News reporter
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