Babcock’s full-year revenue grew by 10% to £5.3bn, ignoring exchange rates, driven by strong performances in its Nuclear and Aviation divisions.
Underlying operating profit rose 19% to £433mn, helped by the top line growth and widening margins. This excludes a one-off £140mn charge from its Type 31 ship-building contract, which experienced higher-than-expected costs due to late-stage design changes.
Underlying free cash flow improved by 71% to £262mn. Net debt fell by £44mn to £329mn.
For the year ahead, around 70% of the group’s revenue was locked in through contracts, a similar level to the prior year. Medium-term guidance was reiterated, with average revenue growth in the mid-single digits and underlying operating margins of at least 9%.
The group announced a new £200mn share buyback programme.
The shares were broadly flat in early trading.
Our view
HL view to follow.
Babcock key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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