Contract wins and the inclusion of May's acquisition of helicopter services business, Avincis, supported decent first-half growth at engineering outsourcer Babcock (BAB). The total order book rose 54 per cent year on year to £18.5bn and 94 per cent of 2014-5's expected revenue is already in the bag.
Lucrative contract wins helped the support services division to bolster revenue by 13 per cent to £559m. Prospects at the division's Cavendish Nuclear subsidiary look especially robust following the start, in early September, of a contract to manage and decommission 12 Magnox nuclear sites. The marine and technology division is also doing well with revenue up 11 per cent to £725m. Prospects here look good after signing a £2.6bn contract with the Ministry of Defence (MoD) to continue providing services at the Clyde and Devonport naval bases until 2020.
The defence and security business, however, saw revenue rise just 3 per cent to £414m. Management say MoD and Armed Forces customers remain highly cost-focused with "little change" in market conditions. Moreover, the international unit was hit by Rand weakness and South African-related revenue fell 7 per cent in sterling terms - although the Avincis deal bolstered international revenue by 167 per cent overall.
Goldman Sachs expects adjusted full-year EPS of 67.5p (from 62p in 2014).
BABCOCK INTERNATIONAL (BAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,169p | MARKET VALUE: | £5.87bn | |
| TOUCH: | 1,168-1,169p | 12-MONTH HIGH: | 1,301p | LOW: 993p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 412p* | NET DEBT: | 62% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p)† | Dividend per share (p)† |
|---|---|---|---|---|
| 2013 | 1.58 | 105.9 | 22.6 | 5. |
| 2014 | 1.94 | 137 | 23.7 | 5.5 |
| % change | +23 | +29 | +5 | +10 |
Ex-div: 11 Dec Payment: 14 Jan *Includes intangible assets of £3.2bn, or 629p a share †Adjusted for May 2014's rights issue | ||||
