Babcock lowers revenue forecast
Engineering services group Babcock has cut its revenue forecasts for this year, blaming a tough business environment and a slowdown in defence spending.
The company includes the Defence Support Group operation at MoD Donnington, in Telford, and the former Macneillie specialist vehicle conversions business at Aldridge, now renamed Babcock Vehicle Engineering.
In a trading update the company cut its predictions of 2018 revenue to £5.3bn from £5.4bn but that still represents growth of between 2% and 3%. And profit margins are expected to be higher than expected, partly due to improvements in efficiency.
This is expected to help offset the drag on revenue due to delays in new orders
Overall Babcock said it was continuing to make steady progress in the second half of its financial year and was on track for record revenue and underlying earnings.
The lower prediction on revenue was down to continued tough trading conditions in the offshore and oil & gas sector and a slowdown in the volume of defence procurement revenue passing through its Equipment Management Operating Centres.
It also blamed slower mobilisation on its £3t0m Marine Systems Support Partner management contract with the MoD, supplying the Royal Navy;s two new aircraft carriers and Type 45 Destroyers.
Meanwhile Babcock has continued bidding for work with a pipeline in process worth around £12.5 billion.
