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LONDON - Babcock International Group (LON:BAB) PLC reported strong financial performance for the year ended March 31, 2025, with results exceeding upgraded guidance and a significant improvement in its balance sheet position.
The defense and nuclear services provider saw revenue grow 11% organically to £4.8 billion, driven particularly by strong growth in its Nuclear and Marine sectors. Underlying operating profit increased 17% to £363 million, excluding one-off items from the previous year, with underlying operating margin improving 50 basis points to 7.5%.
The company generated strong underlying operating cash conversion of 82% despite ongoing business investment, resulting in underlying free cash flow of £153.4 million. Net debt excluding leases reduced to £101.2 million from £210.9 million in the previous year.
Based on the strong performance, Babcock has recommended a final dividend of 4.5 pence per share, bringing the full-year dividend to 6.5 pence, a 30% increase compared to FY24. The company also announced plans for a £200 million share buyback program to be completed in FY26.
CEO David Lockwood said: "FY25 was a pivotal year for Babcock, demonstrating the strength of the business we have built over recent years." He added that the company’s "increased confidence in the potential for future value creation" is reflected in the upgraded medium-term guidance.
Babcock now expects to achieve average revenue growth in the mid-single digits, an underlying operating margin of at least 9%, and average underlying operating cash conversion of at least 80% over the medium term.
The company noted that its contract backlog increased slightly to £10.4 billion, reflecting firm orders related to the five-year DSG contract extension and Mentor 2 contract in France.
The announcement was based on a press release statement from the company.
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