Auguries for Babcock 's (BAB) outsourcing market remain positive both at home and abroad, as the group revealed an encouraging set of metrics and operational outcomes for its March year-end. Headline numbers were broadly in line with consensus forecasts, with operating profit 5 per cent to the good once amortisation charges are discounted. Management expects revenue to grow by around 7 per cent in the 2017 financial year, with margins remaining broadly stable.
Babcock's income performance was reassuring - a case of steady as she goes - but what really impresses is the group's ability to manage its cash flows, regardless of the level of capital commitment. Management has continued to efficiently deleverage the balance sheet following a period of acquisition-driven expansion. Babcock has managed this dynamic several times in the past after securing suitable acquisition targets.