Defence contractor Babcock swings to annual profit
Defence contractor Babcock International has swung to an annual profit as its contract backlog grew, citing governments prioritising defence and national security in the wake of Russia's invasion of Ukraine.
In the financial year ended March 31 2022, Babcock delivered an interim operating profit of £226.8 million, a marked improvement from the prior year's operating loss of £1.7 billion.
Revenue grew 3.3 per cent to £4.1 billion from £3.9 billion, driven by a recovery from Covid-19 impacts a year earlier. The contract backlog was up 21 per cent at £9.9 billion from £8.2 billion. Net debt was reduced from £1.3 billion to £968.7 million.
Babcock, which includes the Defence Support Group operation at MoD Donnington in Telford and the Babcock Vehicle Engineering specialist vehicle conversions business at Aldridge, said the market backdrop was very dynamic as rising geopolitical uncertainty had led to increasing national defence requirements and potentially more opportunities. Macro factors such as inflation and supply chain stress had increased delivery challenges, the company said.
David Lockwood, chief executive, said: “The first year of our turnaround has seen us deliver as we said we would, despite geopolitical volatility and a challenging economic environment. We have successfully stabilised the business; strengthening our balance sheet and driving cultural change across the group.
“The demand for our solutions remains strong, with significant contract wins in the year, and we see more opportunities ahead. When we perform as we should, we offer our customers availability, affordability and capability; enabling them to deliver for their stakeholders in this uncertain world. I am encouraged by our progress this year, but I am determined to continue to drive increasingly profitable growth and improved cash flow in FY23 and beyond.”
