Babcock not to make final dividend payment for 2019-2020
Engineering giant Babcock International, which has operations in the Black Country and Shropshire, will not be paying a final dividend to its shareholders for its last financial year.
Its board says it has made the exceptional decision to delay the payments, which are based on annual performance and were 28.9p a share a year ago, given the continued uncertainty around the out turn for the current financial year.
It says this supports a strategy of continuing to reduce net debt and is appropriate given the aerospace and defence group's limited use of the UK Government's Coronavirus Job Retention Scheme.
Babcock says it recognises the importance of dividends to its shareholders and will resume dividend payments at the earliest opportunity.
The group, which includes the Defence Support Group operation at MoD Donnington, Telford, and Babcock Vehicle Engineering – the former Macneillie specialist vehicle conversions business – at Aldridge,
In the first quarter of the current financial year – April to June – coronavirus had a significant impact on financial results but work continued on key customer programmes and demand for its work in critical areas remained resilient.
More Covid-19 coverage:
Underlying revenue was 11 per cent lower than last year, but revenue from the core business grew slightly.
Underlying operating profit was around 40 per cent lower with around half of the reduction due to lower levels of productivity in the core business.
Order intake in the quarter was £700 million and in July Babcock secured around £500 million of new contracts in its aviation business
Babcock is working closely with customers to return productivity to former levels and have made steady progress in bringing staff safely back into their workplaces.
It expects to see a gradual improvement in group performance
The group's order book at the end of June was £17.3 billion and its bid pipeline was around £17bn.
Chairman Ruth Cairnie said: "We continue to deliver critical programmes for our customers but our financial performance is being impacted by the challenges created by Covid-19. Given the continued uncertainty over the impacts of the pandemic, we are not giving detailed financial guidance for the year at this stage.
"The board has decided not to pay the final dividend for the 2020 financial year in order to prioritise strengthening our balance sheet and reducing net debt. We recognise the importance of dividends to our shareholders and we will resume dividend payments at the earliest opportunity.
"Our experience of the pandemic so far has demonstrated that the foundations of our business – long term programmes in critical and non-discretionary areas – provide a solid platform for delivery in the medium term."
David Lockwood will join the board on August 17 as chief executive designate and replace Archie Bethel as CEO on September 14.
