Babcock International's (BAB) underlying half-year pre-tax profits slumped 18 per cent to £202.5m, as a host of the engineering group’s big contracts, including aircraft carrier work, are coming to a close. But a record combined order book and pipeline of over £34bn, which includes the building of five Type-31 frigates for the UK’s Royal Navy and entry into new markets Norway and Canada, hints at a resurgence for Babcock, which has endured a series of downgrades in recent years.
Babcock’s aviation results were “a bit disappointing”, according to chief executive Archie Bethel, owing to subdued activities in southern Europe and the North Sea. Delays to bids in aerial emergency services and market conditions in oil and gas have forced down full-year aviation revenue expectations. But this impact will be offset by Babcock’s work in the marine and land sectors. The group announced an eight-year £309m training contract with the Metropolitan Police alongside its interim results. There were positives in its weaker sector, too, as Babcock commenced aviation work in Norway and Canada.
Peel Hunt forecasts March 2020 adjusted pre-tax profits and EPS of £450m and 72.6p, rising to £459.7m and 73.9p in FY2021.
| BABCOCK INTERNATIONAL (BAB) | ||||
| ORD PRICE: | 531p | MARKET VALUE: | £2.68bn | |
| TOUCH: | 530-531p | 12-MONTH HIGH: | 602p | LOW: 410p |
| DIVIDEND YIELD: | 5.7% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 561p* | NET DEBT: | 40%** | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 2.25 | 65.1 | 11.5 | 7.1 |
| 2019 | 2.19 | 153 | 25.6 | 7.2 |
| % change | -3 | +134 | +123 | +1 |
| Ex-div: | 05 Dec | |||
| Payment: | 17 Jan | |||
| *Includes intangible assets of £3bn, or 598p a share **Excludes lease liabilities of £616.2m | ||||
