Babcock’s full-year underlying revenue grew by 10% to £5.2bn, ignoring exchange rates, driven by strong performances in its Nuclear and Aviation divisions.
Underlying operating profit rose 19% to £433mn, helped by top line growth and widening margins. However, this excludes a one-off £140mn charge on its Type-31 ship-building contract due to late-stage design changes.
Underlying free cash flow jumped 71% higher to £262mn. Net debt fell by £44mn to £329mn.
Medium-term guidance was reiterated, with average organic revenue growth in the mid-single digits and underlying operating margins of at least 9%.
A final dividend of 5.0p per share was announced, taking the full-year total to 7.5p, up 15%. A new £200mn share buyback programme is set to begin imminently and be completed by the end of March 2027.
The shares fell 3.5% 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.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.