Babcock FY profits dented by Covid-19 costs

In the year to the end of September, statutory pre-tax profit fell to £55.3m from £152.5m in 2019, with revenue down to £2.11bn from £2.19bn the year before. Statutory operating profit was 55% lower than last year at £76.2m following the impact of disposals, the adverse impact of Covid-19 on profitability in many operations and weak trading in its civil aviation businesses.

Chief executive officer David Lockwood said that while demand for its critical services has remained resilient overall, the additional costs incurred and inefficiencies created by the pandemic have impacted profitability.

"Our operating profit performance in the first half reflects this Covid-19 impact as well as disposals, the impact of government insourcing of Magnox and Dounreay, and weak trading in civil aviation," he said.

"In the coming months, we will be reviewing our strategic priorities, execution and delivery. I look forward to reporting back on this in May. In the meantime, we remain focused on delivering for our customers, employees and shareholders and continue to look to the future with confidence."

Babcock, whose performance is typically second-half weighted, said this weighting is expected to be more pronounced this year as it gradually improves its efficiency month by month under Covid-19.

The company also said it will not be providing financial guidance for this year due to ongoing uncertainty over the impact of the pandemic on its markets, including government and customer responses.

At 0825 GMT, the shares were down 8.4% at 325p.