Babcock upbeat despite defence cuts

Defence group Babcock said third-quarter trade had been strong and that the outlook for 2011 and beyond was positive despite defence budget cuts.

Babcock said its order book was stable at about £12bn and the year ahead was positive.

It said its performance was driven by growth at its defence, security and marine units.

The company, which last year bought out rival VT Group, said it was confident of achieving £50m of pre-tax savings from the deal and a run rate of £11m by the end of March.

The Government slashed defence spending by eight per cent last year to help cut the budget deficit, but junior defence minister Peter Luff said last week that it would buy equipment from British firms.

Babcock said in a statement: "We continue to be involved in positive dialogue with our key customers at the Ministry of Defence and with the Cabinet Office. We expect discussions with the Cabinet Office to be concluded by the end of the financial year.

"We anticipate the outcome of the Comprehensive Spending Review and Strategic Defence and Security Review will lead to significant new outsourcing opportunities."