Defence giant Babcock to axe 1,000 jobs and sell off a raft of businesses

AROUND 1,000 jobs are being axed at Babcock International as the defence giant revealed mammoth writedowns of £1.7 billion and plans to sell off a raft of its businesses.

The group – which is the Ministry of Defence’s second largest contractor – said about 850 of the job cuts would be made across its UK operations, with the remainder overseas.

It came as Babcock said a turnaround plan would see it simplify the business and raise at least £400 million from the sale of assets over the next year.

In an update on the group-wide review launched in January, Babcock laid bare its balance sheet woes as it booked £1.7bn in impairments and charges.

It added that group profits are also likely to be around £30m lower, though the company said this is better than was first feared. Chief executive David Lockwood, who took the helm last year, said he hopes that for workers affected by the review, the group will be able to find a “place where people can flourish” through the sale of assets to new owners.

He added: “People will see this as a watershed moment when the new company starts to emerge.”

Babcock employs around 30,000 staff worldwide. The company said it was too early to give further details of jobs cuts, which businesses are set to be put on the sale block or timings, but would provide further details alongside its upcoming full-year results.

However, its annual figures are expected to be delayed due to the pandemic and business review.

The group also warned it remains cautious over profits progress over the year ahead amid a “year of transition”.

But it stressed it would not need to turn to investors to shore up its finances through an equity cash call.

Shares surged more than 30 per cent with relief that the firm will not launch a rights issue, as well as the smaller-than-expected hit to ongoing earnings from the review of contract profitability.