Shares in Babcock (BAB) soared 6 per cent to an all-time high after the engineering outsourcer reported record full-year results that beat market expectations on every profitability measure. Prospects for the coming year look well underpinned by a £15.5bn bid pipeline, up from £9.5bn a year ago, and an order book of £12bn that gives visibility to over 70 per cent of current year revenue. If the outsourcer can convert that pipeline into work, analysts at Jefferies forecast underlying pre-tax profits could hit £356m in the 2014-15 financial year, to produce EPS of 78.7p (from £317m and 71p in 2013).
Trading in the core marine and technology business is well supported by the Queen Elizabeth aircraft carrier programme. Revenues here were up by 11 per cent to £1.2bn, and operating profits increased by 16 per cent to £157m, helped by outperformance on naval base contracts. The support services business enjoyed another bumper year with revenue up 17 per cent to £944m, buoyed by contract wins in nuclear, education and training sectors. Profit growth was more modest, though, mainly due to expenditure incurred on major contract bids, and a cautious view on margins on long-term contracts. Overseas, strong crane hire demand helped drive operating profits up 28 per cent to £24.7m in the international business.
Free cash flow generation remains impressive, up 9 per cent to £163m, which led to a £90m reduction in net debt to £551m.
BABCOCK INTERNATIONAL (BAB) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,157p | MARKET VALUE: | £4.2bn | |
| TOUCH: | 1,156-1,157p | 12-MONTH HIGH: | 1,157p | LOW: 787p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 262p* | NET CASH: | 57% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.90 | 107 | 37.4 | 14.4 |
| 2010 | 1.90 | 129 | 46.3 | 17.6 |
| 2011** | 2.56 | 111 | 30.1 | 19.4 |
| 2012** | 2.85 | 173 | 42.9 | 22.7 |
| 2013 | 3.03 | 225 | 53.0 | 26.3 |
| % change | +6 | +30 | +24 | +16 |
Ex-div: 3 Jul Payment: 8 Aug *Includes intangible assets of £1.9bn, or 514p a share **Restated | ||||
