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Babcock meets guidance despite slump in profits, warns headwinds unlikely to ease

By BFN News | 08:14 AM | Wednesday 22 May, 2019


Babcock International met its guidance despite reporting a slump in pre-tax profits as asset sells and lower activity in the short cycle parts of its business weighed on performance. The company also offered up a dour outlook warning that current headwinds were unlikely to dissipate in the new fiscal year. For the year ended 31 March, statutory pre-tax profit fell 39.9% to £235.2m and revenue slipped 4% to £4.66bn. But underlying revenue of £5.2bn was in line with guidance given in earlier this year in February, with underlying operating profit�up 0.7% to £588m. The full year dividend was raised by 1.7% to 30.0p a share. The combined order book and pipeline was stable at £31bn. Looking ahead to the year ending 31 March 2020, the company continued to expect performance would be affected by a 'number of step downs,' which would reduce revenue by £410m and reduce operating profit by £63m. The company said it expected to generate underlying revenue around £4.9bn, underlying operating profit in the range of £515m to £535m and free cash flow over £250m, and maintain its underlying margin at between 10.7% and 11.0%. 'We have delivered a robust performance this year, operating profit is in line with our expectations, we have sustained our strong margins and we have improved our cash generation,' said Chief Executive Archie Bethel. 'More importantly for the delivery of our strategic goals and our future performance, we have sharpened our focus on our three key markets of defence, aerial emergency services and civil nuclear. We have strengthened our position in these areas with some important contract wins that partially offset the upcoming completion of the QEC contract and the loss of the Magnox contract and we have delivered further growth in our international businesses. In addition, we have exited low margin businesses outside of the three focus markets, which do not have synergy with the rest of the Group, and we have reshaped our oil and gas business.' 'As we begin the new financial year we do not expect the wider market environment to be any less challenging than we have experienced this past year.�' At 8:14am: (LON:BAB) Babcock International Group PLC share price was -48.1p at 459.1p Story provided by StockMarketWire.com

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