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(Sharecast News) - Babcock said on Tuesday that it would not be paying a final dividend, as revenue and profits remained weaker in the first quarter of the new financial year.
The FTSE 250 company said underlying revenue for the first quarter was 11% lower year-on-year, reflecting the absence of Magnox revenue and weakness in its land adjacent market short cycle businesses, including South Africa.
Babcock said that, after careful consideration, it had made an "exceptional decision" not to pay a final dividend given the continued uncertainty around the outturn for the current financial year.
Babcock said safety constraints on proximity working had a significant impact on costs and efficiency, directly impacting its margins and profitability.
Underlying operating profit for the first quarter was about 40% lower than last year, with around half of that profit reduction due to lower levels of productivity in the core business, while Magnox, South Africa and land adjacent market businesses account for the other half.
Order intake in the quarter was £0.7bn, and in July the firm secured around £500m of new contracts in its aviation business, helped by the delays in bid decisions beginning to clear.
Babcock said its "substantial" long term order book and "strong" liquidity position underpinned its confidence in navigating the short-term financial impacts of Covid-19, while safeguarding its key capabilities for the future.
The company said it was expecting a gradual improvement in group performance from the 40% reduction in operating profit in the first quarter, assuming no further setbacks from Covid-19,.
Babcock said that during the period, it repaid its revolving credit facility and extended its term by a year. The facility of up to £775m would now expire in August 2025 and the group said it has access to around £2.4bn of borrowings.
"David Lockwood will join the board on 17 August as CEO-designate and replace Archie Bethel as CEO on 14 September," Cairnie noted.
"Franco Martinelli has informed the board of his intention to retire and a search will be initiated for a new group finance director."
At 1916 BST, shares in Babcock International Group were down 13.11% at 251.9p.
20 Apr 2023 09:01
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