Engineering outsourcer Babcock reported record full-year earnings and operating profits a day after the government announced it has filled the £38bn black hole in the Ministry of Defence budget. An upbeat chief executive Peter Rogers noted: "We have excellent forward visibility with our long-term contracts, strong order book and bid pipeline." He added that the coming year's earnings should be ahead of guidance, prompting analysts at Investec to hint at a 4 per cent upgrade to their numbers. Currently the broker is forecasting adjusted pre-tax profits of £311m and EPS of 66.8p in the 12 months to March 2013, up from £274m and 61.5p, respectively.
These estimates look well underpinned by an order book that has grown from £12bn to £13bn in the past 12 months and which provides over 70 per cent of current-year revenues. And as the government reins in costs, Babcock's bid pipeline has surged, too, up from £7bn to £9.5bn. There was good news on margins, too. That, combined with decent underlying revenue growth in the group's marine, technology and support services businesses, was key to the 19 per cent rise in the group's underlying operating profits. Moreover, with the former VT businesses now fully integrated, cost savings of around £50m will now be delivered ahead of plan.
BABCOCK (BAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 826p | MARKET VALUE: | £3.0bn | |
| TOUCH: | 825.5-828p | 12-MONTH HIGH: | 851p | LOW: 559p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 256p* | NET DEBT: | 70% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.56 | 85 | 30.0 | 11.5 |
| 2009 | 1.90 | 107 | 37.4 | 14.4 |
| 2010 | 1.90 | 129 | 46.3 | 17.6 |
| 2011** | 2.70 | 111 | 30.1 | 19.4 |
| 2012** | 3.07 | 173 | 42.9 | 22.7 |
| % change | +14 | +56 | +42 | +17 |
Ex-div: 4 Jul Payment: 7 Aug *Includes intangible assets of £1.9bn, or 526p a share. **Restated | ||||
