Babcock shares tumble as engineering firm’s profits drop

DEFENCE: Firm assembled aircraft carriers in Rosyth

Engineering giant Babcock International has revealed a 64% plunge in half-year profits after charges linked to its overhaul and it warned over nuclear decommissioning revenues.

The Ministry of Defence supplier, which has a dockyard in Rosyth, reported pre-tax profits falling to £65.1 million in the six months to September 30, down from £181.9m a year earlier.

Profits were pushed lower by a £120m charge related to the restructuring of its oil and gas business and also including costs such as its decision to sell the Appledore shipyard in Devon.

On an underlying basis, Babcock posted a 2.5% rise in pre-tax profits to £245.5m.

Babcock let go hundreds of workers from its Rosyth site last year.

The axe fell on 250 dockyard jobs at Rosyth in November last year as the £6 billion programme to assemble the Royal Navy’s two Queen Elizabeth Class aircraft carriers drew to an end.

A further 150 posts at Rosyth were shed in March.

Babcock stuck to its guidance for the full year, with “low single digit” growth in underlying organic revenues expected and improved profit margins.

But the firm worried investors as it cut its 2019-20 guidance for revenue from its joint venture for decommissioning of Magnox nuclear sites in the UK.

The contract is due to end in August 2019 and Babcock does not now expect any additional revenue after that date.

Chief executive Archie Bethel said: “We are taking decisive actions to further strengthen the group, which will deliver benefits next year and beyond.”

The results follow a torrid time for Babcock shares, which were sent tumbling after a highly critical research paper posted last month by a mystery analyst called Boatman Capital.

Babcock said the claims made by Boatman were “false and malicious”.

Babcock’s shares fell by 28.20p to close at 566.00p

Picture: Steven Brown.