Profits fall for Babcock International

For the six months to the end of September it was £52.8m compared to £152.5m a year before on revenue down from £2.19 billion to £2.10bn

However the group, which includes the Defence Support Group operation at MoD Donnington, in Telford, and the Babcock Vehicle Engineering specialist vehicle conversions business at Aldridge, saw its order book grow from £16.9bn to £17.2bn.

Chief executive David Lockwood said: "I have been enormously impressed by the way in which our people have adapted to the Covid-19 pandemic and continued to prioritise meeting the needs of our customers. Nevertheless, while demand for our critical services has remained resilient overall, the additional costs incurred and inefficiencies created have impacted our profitability."

He said operating profit performance in the first half – down 55 per cent to £76m – reflected the Covid-19 impact as well as disposals, the impact of government insourcing of Magnox and Dounreay, and weak trading in civil aviation.

"In my first three months at Babcock I have spent time seeing many parts of the business. Our strengths are clear. We have many high-quality businesses, with a deep understanding of our customers, operating in markets where demand for our expertise is strong. At the same time, there are areas that need to be addressed if we are to achieve our full potential. The most important aspect will be delivering sustainable free cash flow.

"In the coming months, we will be reviewing our strategic priorities, execution and delivery. I look forward to reporting back on this in May. In the meantime, we remain focused on delivering for our customers, employees and shareholders and continue to look to the future with confidence," added Mr Lockwood.

Babcock expects to gradually improve its efficiency month by month, but uncertainty remains around the impact of the pandemic in its markets and it will continue to not provide financial guidance for this financial year.