Babcock boost from austerity as profit jumps

PROFIT at defence services equipment maker Babcock jumped 13 per cent in the six months to September, as it benefited from governments outsourcing work to private firms.

Pre-tax profit for the entire group came in at £142.7m over the six months, up from £126.3m over the same period last year.

The FTSE 100 company’s revenue edged up six per cent to £1.55bn, pushed up by the support services division, which delivered organic growth of 18 per cent as contracts awarded last year became operational.

The division, which maintains British navy submarines and Metropolitan Police vehicles, has been flattered by the ongoing constraints on government budgets.

The order book for Babcock jumped four per cent to £12.5bn, up £500m from the same period last year, while the bid pipeline soared to more than £13bn during the six months, up from £9bn a year ago.

Group chief executive Peter Rogers said yesterday: “The changing market environment in which we operate and the trend to outsource activities to achieve both financial and operational efficiency is reflected in the strength of our bid pipeline as well as the further significant opportunities we are tracking.”

Robin Speakman, support services analyst at Shore Capital, yesterday hailed the results as “an all-round good performance”.

“Conditions for the second half to March 2013 appear promising to us and, with a number of projects due to commence in coming months, we still hold out the prospect of forecast upgrades in due course,” he said.