Babcock H1 profits boosted by jump in revenues

Half year reported pre-tax profits at Babcock jumped 12% to £163.5m on revenues up 7% to £2.1bn and said it expected full year numbers to be in line with expectations.

The dividend rises 7% to 6.5p a share.

The order book for the group remains at £20bn, having been replenished by £2bn of contracted work during the first half of 2016/17. Babcock said the order book provided strong visibility of future revenues in the short and medium term with 93% of revenue in place for full year 2016/17 and 63% for 2017/18.

"Our UK markets remain positive, with the group well positioned for the significant future outsourcing opportunities expected from both our defence and civil customers, and we see growing international demand for our specialist and complex engineering support services,” the company said.

“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."

Babcock said UK markets continued to grow “despite the broader uncertainties” and that so far it had been unaffected by the decision to leave the European Union.

“The UK government's five-year Strategic Defence and Security Review confirmed its commitment to invest in multi-year programmes, requiring the life extension of existing platforms, and a whole force approach,” it added.

“The requirement to generate £9bn of efficiency savings in the next five years presents a significant opportunity for future growth, as does the continued drive for efficiency and performance across the civil sector.”