Babcock positive on outlook

DEFENCE services group Babcock International said third-quarter trade had been strong, driven by growth at its defence, security and marine units, and that the outlook for 2011 and beyond was positive.
By The Newsroom
Published 25th Jan 2011, 08:40 BST

Babcock, which maintains Royal Navy submarines, said its order book was stable at around 12bn reflecting the steady flow of new contracts and contract extensions and its bid pipeline stood at 6bn.

The company, which last year bought out rival VT Group, said it was confident of achieving 50m of pre-tax savings in total from the deal.

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Britain slashed its defence budget by eight per cent last year to help lower a huge budget deficit, but plans to maintain spending on defence equipment with UK industry despite the cuts.

"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," Babcock said.

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

Babcock said the programme to refinance its 400m bridge facility was progressing well and this would be followed by the refinancing of its 600m revolving credit facility early in the next financial year.

Shares in Babcock have risen seven per cent in the last three months.

Related topics:BritainRoyal Navy