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Investing.com -- Babcock International Group (LON:BAB) Plc on Wednesday reported that revenue for the year ended March 31, reached £4.83 billion, an 11% increase at constant currency, despite slightly missing consensus estimates, sending its shares up by over 2%.
Operating profit rose 17% year-on-year to £363 million, surpassing expectations by 5%. This led to an operating margin of 7.5%, a 40-basis-point improvement from the previous year, excluding one-off items.
Free cash flow came in at £153 million, 18% above forecasts, even with a £40 million accelerated pension contribution.
The company also reduced net debt to £373 million, down from £435 million at the end of FY24, and £101 million excluding leases, from £211 million the prior year. This decrease was attributed to solid cash flow and further debt reduction efforts.
Babcock’s contracted backlog grew to £10.1 billion by March 31, 2025, up from £9.5 billion at the half-year mark.
Two key contracts were secured during the fourth quarter: a €800 million military air training deal with the French Air and Space Force and a £1 billion, five-year extension to the British Army’s land equipment support contract.
The company has also advanced its pension de-risking, finalizing long-term funding agreements for all three of its principal pension schemes.
An additional £40 million was contributed toward pension deficit repair in FY25, and future contributions are set to decrease to £20 million annually for the next six years.
Analysts at Jefferies noted the better-than-expected profit, cash flow performance, and the further reduction in debt as reasons for the positive market reaction.