Babcock profits rise as Ukraine war brings focus to defence spending

The company on Tuesday posted underlying operating profit of £121.7m for the six-months ended to September 30, compared to £115.3m a year earlier.

"We are operating in a macroeconomic and geopolitical environment that remains volatile. We are focused on effectively addressing the challenges our business faces, most notably inflationary pressures, whilst also ensuring we maximise the increased opportunity set we are seeing in a market backdrop that is supportive for defence,” said chief executive David Lockwood.

"I believe we are now well-placed to capture the near and longer-term opportunities emerging in our core defence market."

Babcock and other weapons makers have seen increased demand as Russia's unprovoked war on Ukraine continues to drag on. The company said it was "well placed to capture emerging near and longer-term growth opportunities against an increasingly supportive defence backdrop".

The company has helped the UK government provide Ukraine with training and equipment, including preparing vehicles that were donated by Britain and supporting the training of Ukrainian troops "in a range of domains".

Analysts at Shore Capital said defence related infrastructure is being reappraised globally and prioritised in government budgets across the western nations Babcock serves - providing future opportunity for the company.

"It still remains early to assess the consequences of this for Babcock and others, but it is to be noted that Babcock is an important and strategic services supplier to several nations from its UK core business," they added.

Reporting by Frank Prenesti for Sharecast.com