Babcock International Delivers Consistent Growth, Maintains Outlook

Babcock International Group PLC (LON: BAB) has released its half-year results for the six months ended September 30, 2025, showcasing revenue growth and margin expansion.

The report indicates that the company remains on track to meet its full-year expectations. However, Babcock shares are down over 3% following the news.

Headline Numbers:

• Revenue: £2,538.6m, a rise from £2,408.9m year-on-year, demonstrating organic growth.
• Underlying Operating Profit: £201.1m, compared to £168.8m in the previous year, showing a substantial increase.
• Underlying EPS: 28.5p, up from 23.5p, reflecting improved profitability.

Babcock's contract backlog stands strong at £9.9 billion, slightly below the FY25 figure of £10.4 billion but reflecting significant orders in Land and Aviation.

The company's underlying operating margin has increased by 90 basis points to 7.9%, driven by strong performance in Nuclear and Marine sectors. This improvement indicates enhanced efficiency and profitability across its core operations.

The company's balance sheet remains robust, with net debt excluding leases reduced by £90 million to £56 million. This translates to a gearing ratio of 0.2x. The interim dividend has been increased by 25% to 2.5 pence per share, rewarding shareholders.

Driver Breakdown:

• Nuclear Sector Strength: Significant revenue growth driven by the Nuclear sector, offsetting lower volumes in Land Civil businesses.
• Margin Expansion: Increased underlying operating margin across all sectors, reflecting improved operational efficiency.
• Contract Wins: Secured key contracts, including a £114 million deal for nuclear defueling and international agreements.

CEO David Lockwood said, “Thanks to the skills and dedication of our people, Babcock continued its track record of profitable growth with a strong performance in the first half. Good momentum was underpinned by consistent delivery for our customers against a background of supportive market dynamics.” Lockwood's statement reinforces the company's commitment to sustainable growth and operational excellence.

Babcock is actively pursuing organic and inorganic investment opportunities, including expanding manufacturing capabilities and shipbuilding capacity.

The company is also assessing potential acquisitions, aligning with its disciplined M&A strategy. These strategic initiatives are expected to further enhance its market position and drive long-term value creation.