Babcock shares drop on lower revenue guidance
Shares in engineering outsourcer Babcock International dropped in early trading today as the company flagged that its revenue will be impacted by reorganisation in the defence sector.
Shares were down almost 10 per cent at 724.8p ahead of today's AGM.
Babcock said that its revenues from defence would be impacted by the restructuring of the Defence Equipment and Support organisation, which is a trading entity within the Ministry of Defence.
Defence is one of the three core areas on which Babcock has refocused its business, along with emergency services and nuclear.
Following the reorganisation, Babcock said its UK activity levels in marine and land sectors were slower than expected, and that revenue growth will now be in the low single digits for the year.
Analsyts at Shore Capital said that the update did not significantly change forecasts for the company, and took a positive view on the refocusing strategy.
"The refocus on the core is logical given the breadth of the group, in our view," they said. "The disposals identified South African powerlines activities and North American mining and construction support, both modest in relation to the group and indicated to be lower than group margin."
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