Babcock report highlights Type 31 progress, strong growth

Babcock International has published its half-year results for the period ending 30 September 2024, showing continued financial growth and progress in key sectors, including a notable emphasis on the development of the UK’s Type 31 frigates.

The company’s revenue for the first half of the year increased to £2.4 billion, reflecting an 11% organic growth, largely driven by strong performance in its Nuclear and Land sectors. Operating profits also rose by 10%, with a focus on enhancing the delivery of critical contracts, including work on naval capabilities.

One of the key highlights for Babcock in the marine sector has been the ongoing work on the Type 31 frigates, part of the UK’s Future Frigates programme. The company reported that “the superstructure of the first Type 31 ship is largely complete, with the second ship progressing well and the third having recently cut steel.”

The company is also involved in other high-profile contracts, such as supporting the Miecznik frigate programme in Poland, further strengthening its position in the global defence sector.

Babcock CEO, David Lockwood, expressed confidence in the company’s continued growth, citing a solid order backlog of £9.5 billion, which provides strong visibility for the future. He noted the increasing demand for Babcock’s services amid geopolitical instability, which has heightened the need for defence and security capabilities.

“We continue to focus on driving performance and sustainable growth. Working closely with our customers, we are consistently delivering key programmes and contracts, with enhanced standards of execution. Meanwhile, a backdrop of geopolitical instability means demand for what we do continues to increase, resulting in an expanding and attractive long-term opportunity set. We are selecting the right opportunities and are being disciplined in how we deploy capital to deliver growth which maximises shareholder value.”

The financial results also highlight Babcock’s increased focus on strategic partnerships, including its joint venture with HII to support Australia’s sovereign nuclear capabilities, which is aligned with the growing demands of the AUKUS agreement. Alongside this, Babcock’s investment in its workforce, particularly through the creation of a new Engineering and Nuclear Skills building, further solidifies its commitment to advancing its technological and operational capabilities.

Looking forward, Babcock say it expects to maintain its growth trajectory, with full-year guidance remaining unchanged. With around 90% of its projected FY25 revenue already under contract, the company is positioned well to continue its trajectory of mid-single-digit revenue growth while maintaining strong operational margins. This reflects, the company says, the company’s ability to deliver key defence capabilities both in the UK and internationally, underpinned by a robust pipeline of contracts and opportunities across its diverse portfolio.

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