Babcock reiterates outlook on strong first half

(Sharecast News) - Defence contractor Babcock International reaffirmed its full-year outlook on Thursday after an "encouraging" start to the year. Updating on trading, the blue chip said organic revenue growth and underlying operating margin progress had both been in line with expectations in the five months to August end.

Its nuclear and aviation divisions performed particularly well. In nuclear, it secured a £114m contract to the support the defueling of a decommissioned British submarine over 20 years, while aviation benefited from the ramp up of the French Mentor 2 contract.

Babcock also secured an eight-year contract with the Australian Border Force, to enhance maritime security operations in the Torres Strait.

The strong performances in nuclear, aviation and marine helped offset lower revenues in land, which were impacted by weaker activity in rail.

The firm said: "Trading in the first five months has been encouraging.

"Overall, expectations for the full year remain unchanged, and we continue to progress towards the group's medium-term guidance.

"The macro environment remains supportive, and we continue to make good strategic progress."

As at 1045 BST shares in the blue chip were down 2%, at 1,206

Russ Mould, investment director at AJ Bell, said: "The uncertain geopolitical backdrop and push for European countries to boost defence spending have seen Babcock score as one of the top performers in the FTSE 100 this year.

"The negative response to what is a fairly run-of-the-mill and in-line trading update must be seen in this context, with the shares pausing for breath after more than doubling so far in 2025.

"Not many businesses can call the macro environment supportive right now, but in an increasingly fractious world, Babcock is one."

Babcock was updating investors at its annual general meeting. It is due to publish interim results on 20 November.