Babcock International Group PLC (LON:BAB) has announced its preliminary results for the year ended 31 March 2025.
Strong results, well-positioned for a new era of defence
| Statutory results (unaudited1) | 31 March 2025 | 31 March 2024 |
| Revenue3 | £4,831.3m | £4,390.1m |
| Operating profit | £363.9m | £241.6m |
| Basic earnings per share | 49.1p | 32.9p |
| Full year dividend per share | 6.5p | 5.0p |
| Cash generated from operations | £357.4m | £374.3m |
| Underlying results2 | 31 March 2025 | 31 March 2024 |
| Contract backlog | £10.4bn | £10.3bn |
| Underlying operating profit3 | £362.9m | £237.8m |
| Underlying operating margin3 | 7.5% | 5.4% |
| Underlying basic earnings per share | 50.3p | 30.8p |
| Underlying free cash flow | £153.4m | £160.4m |
| Net debt4 | £(373.3)m | £(435.4)m |
| Net debt excluding leases | £(101.2)m | £(210.9)m |
| Net debt/EBITDA (covenant basis) | 0.3x | 0.8x |
David Lockwood, Chief Executive Officer, said:
“This is a new era for defence. There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth. Our specialist capabilities are increasingly relevant and, with a growing set of opportunities before us, Babcock is committed to play its part in driving prosperity alongside its customers.
“Our strong financial performance in FY25, with operational momentum across the business, has enabled us to upgrade our medium-term guidance, increase our dividend and launch a £200 million share buyback programme for the first time in the company’s history. We look forward to continuing our track record of profitable growth, and to investing in the people and capabilities that will create value for all our stakeholders.”
Financial highlights
• Contract backlog: £10.4 billion, large Land and Aviation awards offset execution on long-term contracts
• Revenue: grew 11% on an organic basis, driven by strong growth in Nuclear and Marine
• Statutory operating profit: up 51% to £364 million. FY24 included two non-recurring items, a £90 million contract loss and a one-off £17 million profit on disposal of property
• Underlying operating profit: up 53% to £363 million, or up 17% excluding the FY24 non-recurring items noted above, driven by strong performance in Nuclear and Land
• Underlying operating margin: up 50-basis points to 7.5% excluding the FY24 non-recurring items, with increased margin in Nuclear, Land and Aviation
• Underlying EPS: 50.3 pence, up 23% excluding the FY24 non-recurring items, due to higher operating profit and a lower interest charge
• Underlying free cash flow: £153 million, underlying operating cash conversion of 82%
• Net debt excluding leases reduced by £110 million to £101 million delivering a gearing ratio of 0.3x (FY24: 0.8x)
• Dividend: recommended final dividend of 4.5 pence per share, taking the total to 6.5 pence per share, up 30%
• Announcement of £200 million share buyback to be executed over FY26
New medium-term guidance:
• Average revenue growth of mid-single digit
• Underlying operating margin of at least 9% (previously at least 8%)
• Average underlying operating cash conversion of at least 80%
• Medium-term guidance underpinned by current business and near-term pipeline
• We are well positioned for opportunities aligned with attractive market growth trends
FY26 outlook
We look forward to another year of progress, and expect to achieve our previous medium term target of underlying operating margin of 8% in FY26, at least one year earlier than we anticipated.
Strategic highlights
• Launched H&B Defence joint venture with HII in Australia
• Signed an MOU with Patria to offer the Patria 6×6 Armoured Personnel Carrier to the UK Armed Forces
• Launched South West Regional Hub for Nuclear Skills to support the delivery of the UK strategic plan for skills
• Launched collaborative Submarine Availability Support Hub in Bristol with Submarine Delivery Agency
• Expanded the General Logistics Vehicle offering through launch of a medium wheelbase. Plans for six-wheel variant
• Launched the Babcock Immersive Training Experience (BITE) to support individual and collective training
Operational highlights
Marine
• In June 2025, we achieved a major milestone as the first of five Type 31 Frigates, HMS Venturer, left the assembly hall and entered the water and returned to dry dock for fit out in Rosyth
• Awarded an additional c.£65 million Capability Insertion Period contract for the Type 31 programme
• Secured a further c.£240 million Missile Tube Assembly contract for the US Columbia Class submarines programme
• Achieved record order intake in LGE of approximately £430 million (up 43%), with more than 70 international contracts
• Successful first year of in-service delivery of the Skynet contract to manage the UK’s military satellite and space operations
Nuclear
• Reopened Devonport’s 9 Dock following significant regeneration work and successfully docked down HMS Victorious
• First Astute Class submarine docked in Devonport’s upgraded 15 Dock facility
• 28% growth in Cavendish Nuclear driven by expansion of new civil nuclear projects
• Continued significant ramp up at Hinkley Point C to install mechanical and electrical services
• After year end, awarded £114 million contract to support first nuclear submarine defueling operations in 20 years
Land
• Awarded sole-source five-year British Army strategic support partner contract extension (‘Reframe’, formerly DSG) worth £1.0 billion
• Awarded additional contract to build 53 High Mobility Transporter Jackal 3 six-wheeled ‘Extendas’ for the British Army
• Launched 120mm Ground Deployed Advance Mortar System with ST Engineering with live firing demo for the UK
• Awarded first NATO training contract and several key UK training contract extensions
• Continued to provide critical defence support capability to Ukraine
Aviation
• Awarded Mentor 2, a contract for 15 years (plus two option years) to deliver military air training solutions for the French Air and Space Force, and Navy
• Secured 12-year contract with Airbus to support 48 French defence and security EC145s across France and overseas
• Reached milestone of 60,000 flight training hours for the French Air Force
• Awarded two-year HADES contract extension to provide technical airbase support services across the UK tri-forces
• Secured a £70 million contract to deliver new infrastructure facilities for Ascent UK Military Flying Training System
See page 18 for segmental analysis
Notes to statutory and underlying results on page 1
1. Unaudited full year results
The financial information set out in this preliminary announcement is unaudited. The Group has completed the preparation of its Annual Report and Accounts for the year ended 31 March 2025. The Group’s auditor, Forvis Mazars, has consented to the release of this preliminary announcement but is not yet in a position to issue its Audit report. Forvis Mazars has advised that the audit is substantially complete with no material matters currently remaining, but that further time is required for documentation and completion procedures. Forvis Mazars expects to issue its Audit report by Tuesday 1 July 2025.
2. 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, net debt excluding leases and contract backlog 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 2024. The Group has defined and outlined the purpose of its APMs in the Financial Glossary on page 30.
3. FY24 non-recurring items
• FY24 included a revenue reversal of £66.3 million from the Type 31 loss. Excluding this, FY24 revenue was £4,456.4 million
• FY24 underlying operating profit included a contract loss of £90.0 million and a profit on disposal of property of £17.0 million. Excluding these, FY24 underlying operating profit was £310.8 million
• Excluding the Type 31 loss and profit on property disposal, FY24 underlying operating margin was 7.0%
• See table on page 18
4. Net debt:
• See reconciliation of net debt on page 14 and in our financial glossary on page 30
See page 18 for segmental analysis and page 30 for financial glossary.
The person responsible for arranging for the release of this announcement on behalf of the Company is Jack Borrett, the Corporate Secretary, Babcock International
Results presentation:
A presentation for investors and analysts will be held on 25 June 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.
