Join our community of smart investors

Babcock hit by aviation delays and oil and gas disruption

The defence support services group has set new guidance for underlying operating profit
February 12, 2020

Babcock International (BAB) has lowered its full-year expectations for its aviation business, which has been hampered by delays and a challenging oil and gas market. The defence support services group has previously flagged delays in the award of new contracts for aerial emergency services in Italy and Spain, which has pushed revenues into future periods.

IC TIP: Buy at 527p

The three largest helicopter services providers operating in oil and gas have all recently emerged from bankruptcy, which has “effectively reset global market pricing levels”. Babcock is also exiting its oil and gas activities in Ghana and Congo. The group expects to incur an exceptional charge of around £85m primarily linked to the write-down of oil and gas assets and leases. Babcock has set new guidance for underlying operating profit at around £540m, down from £540m-£560m.