Results round-up

Full year profits at Marks & Spencer fell 18.5% as new chief executive Steve Rowe engaged in what appeared to be come canny 'kitchen sinking', warning that the current year's profits will be hit by his plan to turnaround the clothing business.

Rowe pushed through a £200m charge on non-underlying items that dragged down profits for 53 weeks to 26 March, with underlying pre-tax profits rising 4.3% to £689.6m on sales up 2.4% to £10.6bn.

Pre-tax profit, however, fell to £488.8m from £483.3m and basic earnings per share declined 16.2% to 24.9p.

The company’s food business saw 0.2% growth in like-for-like sales, but LFL sales at the clothing and home division dropped 2.9%.

Chief executive Steve Rowe said: “Our results last year were mixed. We continued to outperform on Food but we underperformed on Clothing & Home sales. This is not satisfactory and today we are outlining our initial plans to address the issues and to position Marks & Spencer to deliver profitable sales growth.

“We are clear on the actions needed to recover and grow Clothing & Home, which is our top priority; to continue to grow our Food business; and to focus on driving profitability. We are investing to re-establish our price position by sharpening prices and to enhance service by putting more employees into our stores.”

As a result of the actions that will be taken to turnaround the clothing division, short-term profit is expected to take a hit, Rowe said.

Marks & Spencer said it plans to focus on product, quality and fit and restore its price position by cutting prices and reducing its promotional stance.

In addition, it plans to develop sharper ranges, have better availability and invest more in store staffing.

M&S said it will pay a total dividend of 18.7p per share, up 3.9% on the previous year, and a special dividend of 4.6p for the first half of 2016/17.

Babcock International posted a strong set of final results, with the FTSE 100 engineering outsourcer's all-organic profits rising steadily and emitted optimistic sounds about future growth in the UK and internationally.

Underlying revenue of £4.84bn for the 12 months to March was up 8% on the previous year, while underlying pre-tax profit, which excludes amortisation of acquired intangibles and exceptional items, rose 10% to £459.7m.

The Support Services division was a key driver, with organic revenue growth of 13% and operating profit up 7%. This was primarily due to a full year contribution from the Magnox civil nuclear decommissioning contract.

Defence and Security revenues grew 4% and operating profit 2%, helped by the integration of the Defence Support Group (DSG) Aviation and Engineering Support and Airfield Services (AESAS) contract and the start of the UK Military Flying Training System (UKMFTS) fixed wing contract.

At the Marine and Technology division, organic revenue grew 9% and operating profit increased by 14%.

Underlying basic earnings per share climbed 8% to 74.2p, helped in part by tax, while healthy cash conversion saw the full year dividend happily hiked 9% to 25.8p per share.

A 114% rate of cash conversion also meant debt was trimmed 7% to £1.23bn.

The engineering outsourcing specialist said that, with no acquisitions during the year, the organic growth demonstrated the strength and stability of the portfolio, with "market dynamics [remaining] positive for outsourcing" at home and abraod, with many customers seeking increased operational and cost efficiencies in the delivery of critical services.

Maintaining the order book at £20bn thanks to around £4.8bn of contracts awarded during the period, revenue visibility was enhanced with 78% of revenue already secured for 2016/17 and 53% for 2017/18.