Babcock International Group PLC Trading Update (1814B)
September 19 2018 - 2:00AM
UK Regulatory
TIDMBAB
RNS Number : 1814B
Babcock International Group PLC
19 September 2018
19 September 2018
Babcock International Group PLC (Babcock or the Group)
Trading update
Babcock, the engineering services company, is issuing the
following trading update for the period from 1 April 2018. This
follows a trading update issued on 19 July 2018.
Trading in line, outlook unchanged
The Group is trading in line with our expectations and our order
book and pipeline remain strong with a combined value unchanged at
around GBP32 billion (c.GBP18 billion order book and c.GBP14
billion pipeline). Around 87% of revenue is now in place for
2018/19 and around 57% for 2019/20.
Strategic progress
During 2017 we successfully completed the realignment of the
Group management and operating structure into four sectors: Marine,
Land, Aviation and Cavendish Nuclear. This realignment has
intensified our concentration on core higher-margin strategic
businesses and is increasing our focus on three core markets:
defence, emergency services and nuclear. These markets already
account for around three quarters of our revenue and offer
sustainable growth opportunities, particularly internationally.
In July we advised that we intended to exit a number of
non-strategic, small, low-margin businesses in our Land sector. We
have now exited our North American mining and construction support
business and have agreed the sale of our Media Services business
for around GBP30 million, with the sale expected to complete in the
coming months. This follows the exit from our renewables and civil
infrastructure businesses in the UK last year.
This process will continue in the second half of this year,
where we expect to exit our powerlines business in South Africa. We
will also reshape our oil and gas crew change business to improve
performance while ensuring we meet customer needs. We will provide
an update on these activities with the announcement of our half
year results in November.
Operational progress
Our strategy is delivered across our four sectors. Progress in
the period included:
-- Marine secured a five year Ship Naval Design Partnering (NDP)
contract with the Ministry of Defence (MOD) with options for
extension. This important long term contract provides leadership
for the industry development of new naval platforms and mission
systems on behalf of the MOD. In our Energy business, we reinforced
the introduction of our ecoSMRT technology by securing a further
seven liquid gas equipment systems contracts from international
customers
-- Land has been awarded additional contracts worth around
GBP120 million with the Ministry of Defence to maintain equipment
as part of our DSG contract and we have been named the preferred
bidder for a rail services contract in Northern Ireland worth over
GBP100 million
-- Aviation's new HADES contract to provide technical support at
RAF bases is now fully operational. Our French FOMEDEC flight
training contract is moving into the pre-operational phase, with
the manufacture of all 17 PC21 aircraft completed and simulators
being commissioned in the new centre in Cognac
-- Nuclear has been selected as preferred bidder for the
Dounreay Materials Test Reactor decommissioning contract and we
have begun work on the scheduled outage at EDF's Dungeness station.
Activity on new build continues to increase as design programmes
accelerate in preparation for construction at Hinkley Point C
We continue to make significant progress in expanding our
international businesses, including the progress on FOMEDEC. We
have won contracts for fire services in Australia and aerial
emergency services in Finland and we are opening offices in South
Korea and Japan to support ongoing contracts and to develop new
business opportunities.
Outlook for the Group
The outlook for the year is unchanged:
-- We expect low single digit underlying organic revenue growth
at constant currency for the full year with stable margins
-- Underlying earnings guidance remains unchanged and as
previously indicated, revenue and cash flow performance will be
second half weighted as has been the case for a number of years
-- We expect to continue to reduce our debt during the year and
expect our net debt to EBITDA ratio to be around 1.4 times by the
end of the year
Ends
For further information please contact:
Babcock International Group PLC
Simon McGough Kate Hill
Director of Investor Relations Group Director of
Communications
Tel: +44 (0)20 3 235 5592 Tel: +44 (0)20 7355 5312
FTI Consulting
Andrew Lorenz
Nick Hasell
Tel: +44 (0)20 3737 1340
Conference call
A conference call for analysts and investors will be held at
08:00 (UK time) this morning, hosted by Archie Bethel (Chief
Executive) and Franco Martinelli (Group Finance Director).
The dial in number is +44 20 3059 5868. Please state you wish to
join the Babcock trading update when prompted.
A replay of this call and transcript will be made available at
www.babcockinternational.com/investors.
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END
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