Babcock sees reduction in net debt position

FTSE 250-listed engineering support services firm Babcock yesterday said that strong cash generation and good trading conditions in the last quarter will help it hit profit targets.

The firm said its good cash position means it expects to pay down its debts to leave a debt to underlying earnings ratio of less than two times by the end of the financial year.

Babcock’s order book stands at around £12bn and it has a bid pipeline of £10bn, with the firm enjoying a “steady flow of contracts”, the company said in a pre-close update.

It pointed out that it has won the last three major contracts to be offered at the Sellafield nuclear plant in the past year.

Babcock added that the VT business, which it acquired 18 months ago, is now fully integrated into its own operations.

The possible disposal of Babcock’s US defence operations is still being considered, the group said.