Babcock backs FY expectations, reinstates dividend

In the six months to the end of September, underlying operating profit rose 27% to £154m, coming in ahead of expectations, mainly thanks to an earlier-than-expected receipt of licence income from the Polish frigate programme.

Revenue was up 2% on the same period a year earlier to £2.18bn. Babcock highlighted organic revenue growth of 18%, including double-digit growth in three of its four sectors, which more than offset the impact of disposals.

The underlying operating margin rose by 140 basis points to 7.1%, boosted by the licence income, while underlying basic earnings per share were ahead 30% at 20.6p.

The company reinstated its dividend after a four-year hiatus and said it expects to pay an interim dividend of 1.7p per share in January 2024.

Chief executive David Lockwood said: "We have made a strong start to the year, as we continue to build on the exciting momentum we see across the group. We are delivering for our customers, reducing risk and positioning for growth through a number of significant new global teaming agreements.

"We have a clear capital allocation policy, which is providing the group with the flexibility it needs to capture the growing number of value creation opportunities we see ahead. We are reinstating our dividend following a four-year hiatus, reflecting our confidence in the future, and our expectations for the full year remain unchanged."