Babcock International Group plc (LON:BAB) has announced its full year results for the year ended 31 March 2026
Capability for a changing world
| Statutory results | 31 March 2026 | 31 March 2025 |
| Revenue2 | £5,177.7m | £4,831.3m |
| Operating profit | £305.1m | £363.9m |
| Earnings per share (EPS) – basic | 42.1p | 49.1p |
| Full year dividend per share | 7.5p | 6.5p |
| Cash generated from operations | £447.3m | £357.4m |
| Underlying results1 | 31 March 2026 | 31 March 2025 |
| Contract backlog | £9.8bn | £10.4bn |
| Underlying operating profit | £293.3m | £362.9m |
| Underlying operating margin | 5.7% | 7.5% |
| Underlying EPS | 39.6p | 50.3p |
| Type 31 charge2 | £140.0m | – |
| Underlying operating profit excluding Type 31 charge2 | £433.3m | £362.9m |
| Underlying operating margin excluding Type 31 charge2 | 8.2% | 7.5% |
| Underlying EPS excluding Type 31 charge2 | 60.5p | 50.3p |
| Underlying free cash flow | £261.8m | £153.4m |
| Net debt3 | £(329.0)m | £(373.3)m |
| Net debt/EBITDA (covenant basis) | 0.2x | 0.3x |
David Lockwood, Chief Executive Officer, said:
“Against an increasingly uncertain geopolitical backdrop, Babcock has delivered continued strategic and operational progress. We achieved strong underlying growth, improved margins and robust cash generation, while securing important contract wins that further strengthen our position in defence and nuclear markets, where long-term demand is increasingly structural.
“We remain on track to deliver our medium-term guidance. With our core capabilities aligned to our customers’ evolving priorities, we are building a high-quality pipeline of long-term growth opportunities. Babcock is a more resilient business today, with clear momentum and strong visibility. Our people remain our most important asset, and we continue to build a talent-led culture with the right skills, capability and leadership. I leave with confidence that the Group is well positioned for its next phase of delivery, growth and value creation.”
Strong momentum driving underlying performance
| • | Revenue: £5,178 million2, grew 8% organically, driven by strong performances in Nuclear and Aviation |
| • | Underlying operating profit of £293 million2 reflecting strong underlying performance offset by a £140 million charge on the Type 31 contract. Excluding this, underlying operating profit increased 19% to £433 million |
| • | Underlying operating margin: 5.7%2, or 8.2% excluding the Type 31 charge, exceeding our target of 8.0% |
| • | Underlying EPS grew 20% to 60.5p excluding the Type 31 charge |
| • | Underlying free cash flow increased 71% to £262 million, driven by strong operating cash conversion |
| • | Net debt: reduced to £329 million3, delivering a gearing ratio of 0.2x |
| • | Dividend: recommended full year dividend of 7.5 pence per share, up 15% |
| • | Contract backlog: £9.8 billion (FY25: £10.4 billion), reflects FY25 awards and ongoing contract execution |
| • | Share buyback: £200 million completed in April 2026, further £200 million announced, expected during FY27 |
| • | Outlook: FY27 expectations are unchanged, medium-term guidance reiterated |
Continued delivery driving growth and margin expansion
| • | On track to deliver our medium-term target of ≥9% |
| • | Successfully delivered final year of the submarine Future Maritime Support Programme into a six-month extension |
| • | Re-opened Devonport’s 15 Dock facility increasing submarine maintenance capability |
| • | Further ramp-up of activity at Hinkley Point C nuclear power station under the MEH alliance |
| • | Completed float-off the first two Type 31 frigates, production of ship three and four under way |
| • | Ramped up the £1 billion DSG British Army vehicle support contract |
| • | Progressed mobilisation of our Mentor 2 military air training contract |
Strategic progress to drive long-term growth in defence and nuclear in UK and internationally
| • | Expanded partnership with HII including approval to support the US Virginia Class submarine build programme and an MOU to deliver autonomous launch and recovery of unmanned underwater vehicles |
| • | Signed Maritime Partnership Programme framework agreement with Indonesia worth up to £4 billion |
| • | Secured major role as Great British Energy-Nuclear’s Owners Engineer for the UK Small Modular Reactors |
| • | Signed a teaming agreement with Patria to offer its 6×6 armoured personnel carrier to the UK Armed Forces |
| • | Agreement with Hanwha Ocean to be In-Service Support partner on the Canadian Patrol Submarine Project |
| • | Secured a first defence contract in South Africa, for submarine support |
Strong balance sheet and disciplined capital allocation drive value creation and returns
| • | Organic investment in advanced manufacturing capabilities and shipbuilding capacity at our Rosyth facility |
| • | Recommended a 15% increase in full year dividend to 7.5 pence per share |
| • | Completed £200 million buyback in April 2026, announced further £200 million buyback to complete during FY27 |
| • | Assessing pipeline of inorganic investment opportunities in line with our disciplined M&A strategy |
Outlook
| • | For FY27 we expect another year of good progress, supported by strong revenue visibility with around 70% revenue under contract at 1 April 2026, a similar percentage to the prior year |
| • | We reaffirm our medium-term guidance of average mid-single digit organic revenue growth, underlying operating margin of at least 9% and average underlying operating cash conversion of at least 80% |
Notes to statutory and underlying results above
1. Alternative Performance Measures (APMs):
The Group provides alternative performance measures (APMs), including underlying operating profit, underlying margin, underlying earnings per share, underlying operating cash flow, underlying free cash flow, net debt and net debt excluding leases to enable users to have a more consistent view of the performance and earnings trends of the Group. These measures are considered to provide a consistent measure of business performance from year to year. They are used by management to assess operating performance and as a basis for forecasting and decision-making, as well as the planning and allocation of capital resources. They are also understood to be used by investors in analysing business performance.
The Group’s APMs are not defined by IFRS and are therefore considered to be non-GAAP measures. The measures may not be comparable to similar measures used by other companies, and they are not intended to be a substitute for, or superior to, measures defined under IFRS. The Group’s APMs are consistent with those for the year ended 31 March 2025. The Group has defined and outlined the purpose of its APMs in the Financial Glossary below.
2. Type 31 contract charge
The Type 31 contract charge of £140.0 million, which covers the remaining cost of the programme, includes a revenue reversal of £95.5 million. The table below sets out the impacts of the charge. Further details are available below.
| FY26 | Underlying results excluding Type 31 charge | Impacts of the Type 31 charge | Underlying results |
| Revenue | £5,273.2m | £(95.5)m | £5,177.7m |
| YOY growth | 9% | 7% | |
| Organic growth (at constant FX) | 10% | 8% | |
| Underlying operating profit | £433.3m | £(140.0)m | £293.3m |
| YOY growth | 19% | (19)% | |
| Underlying operating margin | 8.2% | (2.5)% | 5.7% |
| YOY variance | 70bps | (180)bps | |
| Underlying EPS | 60.5p | (20.9)p | 39.6p |
| YOY growth | 20% | (21)% |
3. Net debt
Net debt excluding leases as at 31 March 2026 reduced to £22.7 million (FY25: £101.2 million).
Results presentation:
A presentation for investors and analysts will be held on 22 June 2026 at 09:00 am (BST). The presentation will be webcast live and will be available on demand at www.babcockinternational.com/investors/results-and-presentations.
A transcript of the presentation and Q&A will also be made available on our website.
