Babcock International Group PLC

Latest Results (29.06.2026):

Babcock International Group PLC — full year results for the year ended 31 March 2026 (FY26; reported as Q4/FY26 results). The Group reported revenue of £5,177.7m (organic growth c.8%), statutory operating profit £305.1m and underlying operating profit £293.3m. Results were materially affected by a £140.0m Type 31 contract charge recognised in FY26; excluding that charge underlying operating profit would be £433.3m (underlying margin 8.2%) and underlying EPS would be 60.5p. The Board proposed a 15% higher full-year dividend of 7.5p, completed a £200m buyback in April 2026 and announced a further £200m buyback for FY27; underlying free cash flow was £261.8m and net debt reduced to £329.0m. FY27 outlook and medium-term guidance were reaffirmed.

Financial headline

Revenue £5,177.7m; statutory operating profit £305.1m; underlying operating profit £293.3m (underlying EPS 39.6p). Full-year statutory basic EPS 42.1p. Underlying operating margin 5.7% (8.2% excluding the Type 31 charge).

Type 31 contract impact

Babcock recognised a £140.0m Type 31 charge in FY26 covering remaining programme costs; £95.5m of this was recorded as a revenue reversal and the balance increased the contract loss provision. Excluding the charge, underlying operating profit rose 19% to £433.3m and underlying EPS increased to 60.5p.

Cash, debt and returns

Underlying free cash flow £261.8m (up 71%); cash generated from operations £447.3m. Net debt reduced to £329.0m (net debt/EBITDA covenant basis 0.2x). Completed £200m share buyback in April 2026 and announced a further £200m buyback expected in FY27; recommended full-year dividend increased to 7.5p (up 15%).

Operational and sector performance

Organic growth driven by Nuclear and Aviation: Nuclear revenue +14%, Aviation revenue +34%; Marine revenue impacted by Type 31 reversal but LGE and Skynet performed well. Contract backlog £9.8bn (FY25: £10.4bn).

Strategic progress and contract wins

Key strategic developments include Maritime Partnership Programme framework with Indonesia (up to £4bn), expanded partnership with HII to support US Virginia Class submarine work, role as Owners Engineer for UK SMR programme (Great British Energy-Nuclear), and international in‑service support agreements (Canada, South Africa, others).

Pensions and cash contributions

IAS 19 net pension deficit £34.0m (FY25: £8.4m). Employer pension cash contributions reduced (total employer cash contributions £25.0m in FY26 versus £94.5m in FY25) following agreement of long-term funding arrangements.

Outlook

For FY27 Babcock expects continued progress with around 70% revenue under contract at 1 April 2026. The Group reaffirmed medium-term guidance: average mid-single-digit organic revenue growth, underlying operating margin of at least 9%, and average underlying operating cash conversion of at least 80%.