Babcock has reported trading in line with expectations across the first five months of its financial year, with demand across its core defence markets remaining robust and full year guidance unchanged, the company stated in a trading update ahead of its annual general meeting.
The update records continued strong performance in nuclear and aviation, the completion of the chief executive transition, a further £200 million share buyback launched in July, and a £250 million six-year sterling bond extending the group’s debt maturity profile.
Harry Holt, who became group chief executive on 31 July, said: “Since becoming CEO, I have focused on maintaining disciplined execution, engagement with customers, shareholders and partners, investing in our people and sharpening the Group’s priorities for sustainable long-term growth.
“We have started FY27 with good momentum and operational delivery, supported by strong demand across our core defence and nuclear markets, while in the near term the UK Government continues to confirm the details of the implementation of their Defence Investment Plan.”
He said: “In this era of global tension and the rapidly changing nature of warfare, our priorities are clear: deliver for our customers, strengthen programme performance, maintain capital allocation discipline and convert our strong market positions into long-term growth.”
David Lockwood, his predecessor, remains with the group supporting the succession until his retirement in January 2027. According to the company, Holt has progressed a number of organisational and leadership changes aligned with his priorities, aimed at driving growth and accelerating transformation delivery.
On submarine support, the update records that a six-month bridging agreement on the Future Maritime Support Programme with the Ministry of Defence has allowed the company to continue delivering increasing levels of critical naval base and nuclear submarine fleet support while the longer-term Gateway support agreement is finalised.
Among the contracts secured, Babcock was awarded a CAD$1.2 billion six-year extension, worth around £600 million, to lead and deliver Victoria-class submarine in-service support for the Royal Canadian Navy, with the potential to extend to the fleet’s expected end of life in the late 2030s. It was also selected as preferred bidder for an eight-year contract supporting operational combat training for the French Air Force, which the company describes as its first combat flight training contract supporting France’s warfighting readiness.
A follow-on contract from the Ministry of Defence covers keeping Ukraine’s gifted military vehicles, including Challenger 2 tanks, frontline-operational. In Australia, a follow-on five-year contract worth around £60 million was awarded in partnership with Saab for through-life engineering and supply chain support to the Royal Australian Navy’s Anzac-class frigates.
The company has announced a collaboration with Supacat to enhance its General Logistics Vehicle offering for the British Army’s Light Mobility Vehicle programme, intended to replace the retiring Land Rover fleet, which it says builds on the delivery of the final British Army Jackal from its production line.
On exports, the update notes that Poland floated off its first Miecznik-class frigate, based on the Arrowhead 140 design, which the company describes as further evidence of the knowledge and technology transfer programme supporting Polish sovereign skills and industrial capability, and a key component of its frigate licence and export proposition.
Babcock welcomed the Defence Investment Plan published in June, noting the £298 billion of spend over four years with further clarity on funding expected at Budget 2026. It also referred to Project Royal Oak, the £26 billion programme announced at Devonport in August covering £7 billion for the naval base and dockyard and £15 billion to regenerate HM Naval Base Clyde, stating that as sole through-life support provider for the nuclear submarine fleet and incumbent site operator at both bases it is well placed to benefit.
On the hybrid navy, supported by around £1.5 billion over four years, the company says it is working with HII and Arondite through ARMOR Force to combine and develop autonomous systems, modular technology and digital innovation.
The group expects to publish its half year results on 19 November, at which Holt said he looks forward to sharing more.
