The Courier & Advertiser (Perth and Perthshire Edition)
Rosyth proving to be a key component for engineering giant
Babcock highlights Fife yard as group’s half-year profits rise
Multinational support services group Babcock is on course to hit full-year financial targets after delivering a 7% increase in half-year profits.
The company – which is working with Alliance partners to deliver the UK’s new flagship fleet of Queen Elizabeth Class aircraft carriers at its marine services base at Rosyth – also saw revenues rise 6% to £2.49 billion in the six months to September 30.
It declared a half-year dividend of 6.5p, up 7% on the year previous.
Babcock said its £20bn order book gave it “excellent visibility of future revenues”, and it expected to continue to grow in the UK despite “broader uncertainties”.
It said the fundamentals of the business were unchanged following Brexit, and the “vast majority of the group’s operations in Scotland” would be unaffected if the country was to eventually become independent through a second referendum.
Babcock is involved in a significant range of defence and civil works in the UK and overseas.
The marine and technology business generated revenues of £838.8 million in the period under review, up 6% on 2015.
The firm highlighted the importance of Rosyth to that outcome.
It said the aircraft carrier project remained “strategically important” to the group with the programme remaining on schedule.
The company said work was now focused on systems commissioning and harbour trials for the first carrier, while the second ship was now “consolidated to her full length” in dry dock.
In June, Rosyth also took in the submarine to be used in the Ministry of Defence’s demonstration dismantling project – a stay that has been extended until work to remove low-level waste begins.
Additionally in the period, Rosyth beat off competition from two American companies to secure a multi-millionpound contract to manufacture 22 tactical missile assemblies for General Dynamics Electric Boat.
Chief executive Archie Bethel expects Babcock to make good progress this year and beyond.
“Babcock continues to perform, delivering growth in revenue, profit and earnings, and maintaining healthy levels of cash generation and conversion,” said Mr Bethel.
“The long-term visibility provided by our £20bn order book and substantial pipeline of opportunities underpins our future growth.
“Our UK markets remain positive, with the group well positioned for the significant future outsourcing opportunities expected from both our defence and civil customers, and we see growing international demand for our specialist and complex engineering support services.
“Despite slightly slower organic growth, the board expects the full-year results to be inline with its expectations .”
Shares in Babcock closed the day down 46p at 945p.