Babcock targets supply deals with French armed forces

BABCOCK, the company that maintains Britain’s submarine fleet, is seeking to boost dealmaking with the French armed forces after Emmanuel Macron ordered a shift in defence strategy.

Armed forces around the world are determined to their ensure warplanes, ships and other weapons are dusted off and ready to use in the wake of Russia’s attack on Ukraine.

David Lockwood, chief executive of Babcock, said it was eyeing opportunities as France considers allowing more contractors to bid on maintenance, training and support.

Mr Lockwood said: “We’ve identified France as a core market, which is quite unusual for a UK defence company. France, I think, has always been tempted to follow the UK model of using contractors.”

Babcock already offers pilot training to the French Air Force, an award that “was a kind of break with tradition”, Mr Lockwood added.

Babcock will have to bear an extra £25m of wage costs as some of its contracts do not provide for soaring inflation. The company hopes to recoup this through cost cutting, it said.

“We are re-learning some good habits,” Mr Lockwood added, “after a long period of low inflation.”

Babcock said sales in the six months to October grew 5pc compared with a year earlier following a series of new contracts including a deal to support the Royal Air Force’s fleet of Hawk training aircraft.

Its debt fell by more than £300m to just over £1bn in the past year. Profit before tax for the period rose to £106m from £99m a year ago.

Heightened tensions with Russia are likely to put more strain on the UK’S submarine fleet as more vessels will be expected to more closely track their Russian counterparts, leading to more maintenance. This could also offer more work for Babcock, Mr Lockwood added.

Since taking over as chief executive in 2020, Mr Lockwood has sold off a string of Babcock’s businesses in an attempt to resume profitability at the company.

Last year it sold part of the helicopter operations once labelled a “nightmare” by his predecessor Archie Bethel for £10m after paying £1.6bn for it eight years ago.

Mr Lockwood also sold Babcock’s Frazer-nash Consultancy to US engineering firm KBR for £293m last year.