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Babcock makes progress in fortifying balance sheet

Margin improves due to fewer Covid disruptions but company suffers big cash outflow
Babcock makes progress in fortifying balance sheet
  • Net debt falls to 2.1 times cash profit after Fraser Nash sale
  • Asset disposals set to continue in second half

Defence contractor Babcock (BAB) is making progress in repairing its balance sheet, having sold off three businesses worth £400m in recent months.

Net debt reduced marginally to £1.35bn during the period, but will fall further once the proceeds of recent sales are accounted for. Debt excluding operating leases stood at £938m at the end of September, or 2.8 times Babcock’s cash profit. The £290m sale of engineering consultancy Fraser Nash to US industry giant KBR in October effectively reduces this figure to 2.1 times and the company's near-term target is to cut this below 2 times.

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