Babcock International Group PLC

Latest Results (19.09.2026):

Babcock International Group PLC — FY26 full year results (year ended 31 March 2026): Babcock reported a strong underlying FY26 performance with group revenue of £5.2bn, underlying operating profit of £433m and an underlying operating margin of 8.2% (excluding a Type 31 programme charge). The year delivered robust cash generation (underlying free cash flow £262m and 84% cash conversion excluding Type 31), completed a £200m buyback in April 2026 and increased the ordinary dividend to 7.5p. Results were offset by a £140m charge on the Type 31 shipbuilding programme (including contingency) with further cash impacts expected over the remaining contract years.

Headline financials

Group underlying revenue £5.2bn; underlying operating profit £433m; underlying operating margin 8.2% (70bps improvement year‑on‑year, excluding Type 31); basic EPS 60.5p; underlying free cash flow £262m; underlying cash conversion 84% (ex Type 31).

Type 31 shipbuilding impact

Babcock revised the Type 31 programme cost and recognised a total charge of £140m (including contingency), with a cash impact to be realised over the remaining years of the contract. The Marine division reported an underlying operating loss of £30m for FY26 including the Type 31 effect; excluding the Type 31 impact Marine underlying operating profit was £110m and margin 6.5%.

Segment performance

Nuclear: revenue £2,070m, underlying operating profit £197m, margin 9.5% (up 70bps) driven by Clean Energy and submarine support. Marine: reported revenue ~£1.59bn, impacted by Type 31; underlying profit loss £(30)m (see above). Land: revenue £1,084m, underlying operating profit £95m, margin 8.8% (up 110bps). Aviation: revenue £431m, underlying operating profit £31m, margin 7.1% (up 90bps).

Cash, capital allocation and returns

Underlying free cash flow £262m; net leverage reduced to 0.2x; completed a £200m buyback in April 2026 and announced an additional £200m buyback for FY27; ordinary dividend increased 15% to 7.5p. FY27 capital/tax/interest guidance includes net capex c.£120–150m, pension deficit repair contributions ~£20m, interest c.£35m and tax c.£60m.

Balance sheet and financial discipline

Strong balance sheet with retained BBB+ rating (Dec 2025), continued focus on disciplined capital allocation, targeted organic investment and reduced pension cash contributions following long‑term funding deals.

Outlook and guidance

Management reaffirmed medium‑term guidance and expects another year of good progress in FY27 while maintaining strategic momentum in defence and nuclear markets. FY27 includes an additional £200m buyback and continued investment to support growth and readiness opportunities.