Government cuts boost Babcock earnings

 
Suzie Neuwirth
UK ENGINEERING firm Babcock yesterday gave an upbeat outlook for the year ahead, as it unveiled a 15 per cent rise in full-year profits.

The FTSE 100 company posted a nine per cent rise in revenue to £3.5bn and pre-tax profits of £316.1m.

Babcock, which generates more than half its revenue from the Ministry of Defence, has benefited from increased outsourcing as the government looks to cut costs.

It said it expects to see significant growth from its acquisition of helicopter firm Avincis Group, which it completed after the end of the financial year.

In March, Babcock, along with its joint venture partner Fluor, was announced as preferred bidder for the decommissioning of 12 nuclear sites in the UK, one of the largest government contracts ever put out to tender. There has been a legal challenge on the Magnox contract, although analysts expect this is unlikely to succeed.

“Our markets remain buoyant and we enter the new financial year with a powerful platform for further growth in the UK and overseas,” said chief executive Peter Rogers.

“Building on the strong growth in revenue and earnings delivered in the 2013-14 financial year, the board is confident the group will continue to make further strong progress in the 2014-15 financial year.”

The firm increased its dividend by 13 per cent to 21.4p.