11th Jun 2020 08:52
(Alliance News) - Babcock International Group PLC on Thursday reported a loss for financial 2020 as the company recorded "good" growth in its Defence unit but saw "weakness" in its Aviation unit - resulting in over GBP500 million of impairment charges.
Shares in Babcock were down 6.0% in London on Thursday morning at 383.42 pence each.
For the year ended March 31, the FTSE 250-listed defence contractor sunk to a pretax loss of GBP178.2 million compared to a GBP235.2 million profit the year before.
Babcock's exceptional items rose sharply to GBP502.9 million from GBP160.8 million. The dramatic rise includes a GBP395 million goodwill impairment in its Aviation unit and GBP143 million in charges from oil and gas write downs, an anti-trust fine in Italy, and restructuring - all also within the Aviation unit.
London-headquartered Babcock's revenue was flat at GBP4.45 billion versus GBP4.47 billion the year before.
Chief Executive Archie Bethel said: "We end a busy year in a strong position to deal with the current coronavirus uncertainty. We saw strong performances across our Marine, Nuclear and Land sectors and have taken action to address weaknesses in Aviation, including writing down goodwill to reflect our updated expectations of the oil and gas market. The early impact of the global Covid-19 pandemic had a limited impact on the group in the last financial year but is creating uncertainty as we head into this new financial year."
The company has deferred its decision on a final dividend until later in 2020, when the coronavirus pandemic "becomes clearer". Until then, Babcock's total dividend drops to 7.2 pence from 30.0p the year before.
Babcock ended March 31 with net debt of GBP922.1 million, and said it is "comfortable" with its liquidity. The company held a cash balance of GBP1.35 billion at the end of March.
Underlying free cash flow totalled GBP192.2 million in financial 2020, down from GBP323.7 million the year before.
Babcock's order book at March 31 stood at GBP17.6 billion, with an intake in financial 2020 of GBP5.3 billion.
Looking ahead, Babcock said it is unable top give forward guidance owing to the "level of uncertainty" caused by Covid-19.
Work on critical, non-discretionary long term contracts - around 80% of its revenue - continues, Babcock noted. Work across our short cycle businesses - around 20% of revenue - however, will be "more heavily impacted" due to lower demand levels. Sector margins, Babcock added, will be hurt by lower demand and productivity levels.
"We enter the new financial year facing uncertain times but the long term characteristics of our business remain strong," Bethel said.
He added: "Despite this uncertainty, the group's strong liquidity position, robust business model, record order book and pipeline and focus on critical services gives us confidence that we will deliver for all our stakeholders in the current year."
By Paul McGowan; [email protected]
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