The Courier & Advertiser (Angus and Dundee)
Writedown leads to a loss for major Fife employer Babcock
ROSYTH: Group’s oil and gas division its ‘area of weakness’
Major Fife employer Babcock has deferred a decision on its final dividend as the engineering firm recorded a loss last year.
Babcock’s facility at Rosyth has recently delivered a major contract to assemble two Queen Elizabeth aircraft carriers for the MOD.
It will also play a key role in a £1.25 billion contract that will see the next generation of Type 31e warships assembled in Fife.
The group’s full-year accounts, published yesterday, show it took impairments from exceptional items of £503 million, including a writedown of the value of its oil and gas aviation business which transports workers to rigs.
For the 12 months to March 31, it posted an underlying operating profit of £524m, 11% lower than last year, but sunk to a statutory loss of £165m when factoring in the charges.
Chief executive Archie Bethel labelled the oil and gas division as Babcock’s “area of weakness”, weighed down by challenging market conditions, key contract losses, lower pricing and fewer flight hours.
“We saw strong performances across our marine, nuclear and land sectors and have taken action to address weaknesses in aviation, including writing down goodwill to reflect our updated expectations of the oil and gas market.
“The early impact of the global Covid19 pandemic had a limited impact on the group in the last financial year but is creating uncertainty as we head into this new financial year.”
Mr Bethal, who will step down from his role once a successor is found, said the decision on a dividend would be taken when there was “greater certainty on the impact Covid-19 will have on our business and stakeholders”.
He added: “Despite this uncertainty, the group’s strong liquidity position, robust business model, record order book and pipeline and focus on critical services gives us confidence that we will deliver for all our stakeholders in the current year.”