Babcock International (BAB) shares slipped as the company warned it may have to book a loss of between £50mn-£100mn on a contract to build five frigates for the Ministry of Defence.
Babcock won the Type 31 contract in 2019 to deliver the vessels at an average production cost of £250mn per ship, the first of which is due to be delivered in December. The company has recognised £600mn in revenue from the programme so far but hasn’t made a profit, citing “additional forecast costs resulting from certain macroeconomic conditions that were not foreseen” when work began.