Babcock returns to profit in H1

Aerospace, defence, and nuclear engineering services firm Babcock said it had returned to a first-half operating profit despite "geopolitical volatility" and a "challenging" economic environment.

Babcock said it had delivered an interim operating profit of £226.8m, a marked improvement from the prior year's operating loss of £1.73bn, while basic earnings per share came to 32.5p, up from a 357.0p per share loss in 2021.

Revenues grew 5% organically to £4.1bn, driven by a recovery from Covid-19 impacts a year earlier, while cash generated from operations fell from £475.4m to £41.8m.

Babcock also noted that its contract backlog was up 21% to £9.9bn, including £3.1bn of its £3.5bn Future Maritime Support Programme contract.

Net debt was reduced from £1.35bn to £968.7m and the group's net debt/EBITDA ratio dropped to 1.8x from 2.4x. Group underlying operating margin increased 30 basis points to 5.8%.

Chief executive David Lockwood said: "The first year of our turnaround has seen us deliver as we said we would, despite geopolitical volatility and a challenging economic environment. We have successfully stabilised the business; strengthening our balance sheet and driving cultural change across the group.

"The demand for our solutions remains strong, with significant contract wins in the year, and we see more opportunities ahead. When we perform as we should, we offer our customers availability, affordability and capability; enabling them to deliver for their stakeholders in this uncertain world. I am encouraged by our progress this year, but I am determined to continue to drive increasingly profitable growth and improved cash flow in FY23 and beyond."

As of 1045 BST, Babcock shares were up 1.40% at 348.40p.

Reporting by Iain Gilbert at Sharecast.com