22nd Nov 2016 10:24
LONDON (Alliance News) - Defence support services company Babcock International Group PLC said its organic revenue growth in the first half was slightly below its expectations, but it remains confident it will meet its forecasts for the full year as revenue and profit grew.
The stock was down 4.3% to 948.50 pence on Tuesday, one of the worst blue-chip performers.
Babcock said organic revenue growth, excluding its share of joint ventures and in constant currencies, was 4.0% in the half-year to the end of September from a year before. This growth was slightly weaker than Babcock had expected due to the phasing of contract awards, macroeconomic issues hitting its business in South Africa, and the impact of the grounding of the H225 helicopter, which Babcock uses in its Mission Critical Services business.
The helicopter was grounded by maker Airbus following a fatal crash near Turoy in Norway in May.
Babcock's total revenue for the period grew 7.0% to GBP2.17 billion from GBP2.04 billion a year prior, while its order book remained flat at GBP20.00 billion. Babcock said it maintained its contract win rate, winning around 40% of new bids and retaining around 90% of contracts for which it rebid.
Babcock said its order book has been underpinned by good activity on the long-term Maritime Support Delivery Framework in the UK, progress on the Magnox and Dounreay nuclear power plant decommissioning projects, and activity supporting the UK's Dreadnought class submarines.
Babcock said work has now started on its long-term UK Military Flight Training System Rotary and Fixed Wing training contracts and said its Mission Critical Services unit has continue to grow its portfolio of emergency services contracts, with 31 new contract wins and extensions secured in the half.
Babcock said 93% of its revenue for the full financial year to the end of March is in place, while 63% of revenue for the 2018 financial year also is now in place.
The FTSE 100 company said it made a pretax profit of GBP163.5 million in the half-year to the end of September, up 12% from GBP146.3 million a year earlier.
It declared an interim dividend of 6.50 pence, up 7.0% from 6.05p a year before.
"Babcock continues to perform; delivering growth in revenue, profit and earnings, and maintaining healthy levels of cash generation and conversion," said Archie Bethel, Babcock's chief executive.
Bethel said the group's end-markets remain positive, and it is well positioned to benefit from future outsourcing opportunities from its defence industry and civil customers, in addition to growing demand internationally for its services.
"Despite slightly slower organic growth, the board expects the full-year results to be in line with its expectations. We therefore remain confident of making good progress both this year and beyond," the CEO added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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