Babcock's (BAB) support services division was the driving force behind the outsourcing giant's half-year profit growth, typified by the success of its nuclear decommissioning work via the Cavendish Nuclear joint ventures. Support services revenue increased by a third, which alongside a solid performance from the marine and technology division, fed through into a 14 per cent rise in underlying pre-tax profits to £214m.
The marine and technology business drove efficiencies and cost reductions, which helped divisional operating profits grow by 11 per cent to £803m. However, defence and security revenue fell 3 per cent as the group's 'regional prime contracts' with the Ministry of Defence were completed. In October the division won a five-year contract to deliver aviation engineering services and aircraft support to the Royal Navy at the Yeovilton and Culdrose air stations. Chief executive Peter Rogers says extra funding announced by the government under the strategic defence review would be positive for Babcock, which is already working with the armed forces on some of the initiatives announced.
Broker Peel Hunt expects adjusted EPS of 74.9p for the year ending 31 March 2016, up from 68.1p in 2015.
BABCOCK INTERNATIONAL GROUP (BAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,049p | MARKET VALUE: | £5.29bn | |
| TOUCH: | 1,049-1,050p | 12-MONTH HIGH: | 1,200p | LOW: 869p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 447p* | NET DEBT: | 58% | |
| Half-year to 30 Sept | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 (restated) | 1.94 | 137 | 23.7 | 5.50 |
| 2015 | 2.04 | 146 | 24.7 | 6.05 |
| % change | +5 | +7 | +4 | +10 |
Ex-div:10 Dec Payment:14 Jan *includes intangible assets of £3.2bn, or 634p a share | ||||
