(Alliance News) - Babcock International Group PLC on Monday said it is trading in line with expectations for its current financial year, as geopolitical tensions following Russia's invasion of Ukraine drive up defence spending.
In the first five months of its year-to-date, the London-based aerospace and defence firm said revenue and profit are set to meet expectations for the financial year ending on March 31 next year.
The hit to revenue from the prior year's disposals is being offset by organic growth, Babcock said.
"The market backdrop remains dynamic. Ongoing geopolitical uncertainty is leading to increased national defence requirements and potentially more opportunities, while macro factors such as inflation and supply chain stress increase delivery challenges," Babcock said.
It still expects a net cash outflow for its first half, which will return to positive free cash flow in the second half. The outflow is due to the timing of pension deficit payments.
Babcock noted good order momentum, with multiple new contracts won in the year so far, including a 10-year support contract for Queen Elizabeth class aircraft carriers.
Shares in Babcock were down1.2% to 302.40 pence each in London on Monday morning.
The company expects the EUR136.2 million sale of its aerial emergency services business to Ancala Partners to complete by the end of the calendar year. This was first announced back in July.
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Babcock (BAB)
