Babcock International Group PLC reports strong FY26 performance, driven by Nuclear and Aviation sectors, despite a £140 million non-recurring charge on the Type 31 contract. Revenue grew 10% to £5,273 million, with underlying operating profit (excluding the charge) up 19% to £433 million. Underlying operating margin (excluding the charge) increased to 8.2%, exceeding the FY26 target. Free cash flow rose significantly to £262 million, and net debt reduced to £329 million. FY27 expectations remain unchanged, with around 70% of revenue under contract. The company announced a new £200 million share buyback program and highlighted strategic progress, including partnerships and contract wins in defense and civil nuclear sectors. The Type 31 contract faces challenges due to design changes and rework, leading to the £140 million charge. CEO succession is underway, with Harry Holt succeeding David Lockwood. Audited FY26 results are expected in late June.
| Metric | FY26 (2026) | FY25 (2025) | Change |
|---|---|---|---|
| Contract Backlog (£bn) | 9.6 | 10.4 | -7.7% |
| Revenue (£m) | 5,273 | 4,831 | +9.1% |
| Underlying Operating Profit (£m) | 293 | 363 | -19.3% |
| Underlying Operating Margin (%) | 5.7 | 7.5 | -1.8% |
| Underlying Basic Earnings per Share (p) | 39.6 | 50.3 | -21.3% |
| Type 31 Charge (£m) | 140 | - | N/A |
| Underlying Operating Profit Excl. Type 31 (£m) | 433 | 363 | +19.3% |
| Underlying Operating Margin Excl. Type 31 (%) | 8.2 | 7.5 | +0.7% |
| Underlying Basic Earnings per Share Excl. Type 31 (p) | 60.5 | 50.3 | +20.3% |
| Underlying Free Cash Flow (£m) | 262 | 153 | +71.2% |
| Net Debt (£m) | -329 | -373 | +11.8% |
| Net Debt/EBITDA (covenant basis) | 0.2x | 0.3x | -0.1x |