Babcock reassures of stable order and trading in first quarter

Engineer Babcock said its order book and bid pipeline have remained stable since its final results in May and reassured that trading in the new year had "started well".

The defence, aerospace and energy specialist said in a statement ahead of its annual shareholder meeting that had around 85% of full year revenue now in place and 56% for the 2017/18 financial year.

While saying it was too early to predict the effect of Brexit on the wider economy, Babcock said it saw the long term fundamentals of the business as "unchanged" and remains confident of continued growth, with its operations in Europe delivered by locally-based companies.

In May, management guided to around 7% revenue growth and broadly stable margins around the 11% seen last year

"The financial year has started well, with trading in line with our expectations of further progress this year and beyond," the company said. "Whilst it is too early to predict the effects of recent political events, the board continues to expect good opportunities for growth this year and over the medium term."

Within the marine division there were additional new equipment support contracts announced, while in support services, Babcock said discussions with the Nuclear Decommissioning Authority regarding the significant growth in the Magnox contract are expected to reach formal agreement later this year, with a circa £100m reduction in nuclear activity due this year, as previously indicated.

With the recent depreciation of sterling, debt conversion is now indicated to result in slightly higher debt levels at the end of the year, with the debt-to-EBITDA ratio now expected at 1.8, previously 1.7.

Broker Shore Capital said the company appeared to have enjoyed a solid start.

"Overall, we still feel that some hiatus in decision making from the UK Government from the Brexit period is likely to continue for a while yet as spending priorities are reset."