Babcock shares rise as it stays on track to engineer revenue growth
Engineering services firm Babcock saw shares tick upwards on news it remains on track to deliver slightly higher revenue while cutting debt.
The engineering services firm’s order book stands at around £18bn while the firm has £14bn in its pipeline of opportunities, it said in its trading update for the six months to the end of September.
Around 87 per cent of revenue is now in place for 2018/19, the firm said, while 57 per cent of revenue for 2019/20 is in place.
Shares rose nearly three per cent in early morning trading.
Babcock said it would double down on the “sustainable growth” opportunities in its four sectors – marine, land, aviation and Cavendish nuclear – after realigning the business to focus on these in 2017.
It has continued to pare down operations over the last few months, in July announcing its intention to exit some non-strategic, low-margin businesses in its land business.
It’s also quit its presence in the North America mining and construction support industries, and has agreed the sale of its media services arm for around £30m, expecting that to complete in the coming months.
These follow Babcock quitting the UK renewables and civil infrastructure spaces last year.
It intends to exit its South Africa power lines business in the second half of the year, while it plans to “reshape” its oil and gas crew change business to improve performance.
Babcock signed a five-year deal with the Ministry of Defence (MoD), while its energy business saw it sign seven new contracts to provide liquid gas equipment systems with international customers.
The MoD will also hand it £120m for equipment maintenance as part of its defence support group contract, while it was named the preferred bidder for a £100m rail services contract in Northern Ireland.
It expects full-year revenue to grow in low single digits.