Government austerity boosts Babcock to a strong first half

ENGINEERING support services firm Babcock said yesterday that trading had been in line with expectations, and it was confident it could meet forecasts for the full financial year.

Babcock, which maintains British navy submarines, said in a statement yesterday it continues to see “buoyant” market conditions, benefitting from governments outsourcing more work to the private sector to save money.

“Our businesses continue to experience buoyant market conditions, in both civil and military markets, as current and potential customers continue to seek increased efficiency and improved availability of assets,” it said.

Its order book remained stable at around £13bn, with a regular flow of smaller contract wins – including the refit of Britain’s Vanguard submarines at its Devonport dockyard, power transmission in Scotland and estate management for West Yorkshire Police – in the first half of the year.

Babcock said it was tracking “significant” defence equipment and training support opportunities, which are expected to move into the bid pipeline going forward.

Kevin Lapwood, analyst at Seymour Pierce, said yesterday: “The need to significantly reduce the defence budget, without any significant scope to further reduce capability, will lead to more outsourcing to proven operators like Babcock.”

Its shares closed up 2.44 per cent at 945p yesterday.