Babcock says it will hit its targets despite slowdown

 
Steve Dinneen
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SUPPORT services group Babcock International said yesterday it will hit targets for the first half of the year despite a slowdown in the number of contracts coming to tender in the UK.

Babcock, which maintains Royal Navy submarines, said a review of defence spending should boost demand for outsourcing, driving forward momentum.

It also said its pipeline of bids in Britain and overseas remained healthy. Its order book stands at £12bn and the pipeline of opportunities currently being bid for is valued at around £5bn.

The group is confident of saving about £50m a year from its acquisition of rival VT Group, which was completed in July.

A spokesman said: “As a major supplier of critical support services to the government, in particular the Ministry of Defence, we have been involved in active dialogue with ministers to discuss how we can help them achieve both the short and medium term savings they need.”

Meanwhile, peer Smiths group said yesterday tighter government spending will affect its sales growth and it will instead focus on squeezing more costs out of the business to improve margins. The company whose products range from airport scanners and bomb detectors to medical devices and fuel hoses, reported a better-than-expected 17 per cent increase in headline pre-tax profit to £435m on sales of £2.77bn. Analysts were expecting the company, to report headline pre-tax profit of about £383m on sales of £2.71bn.

Smiths’ customers include the US Department of Defence, the UK Ministry of Defence and airports operator BAA. A spokesman said: “The economic environment remains uncertain and delivering sales growth in the short to medium term is likely to remain challenging.”