REG - Babcock Intnl Group - Q3 trading update – strong delivery underpins FY

Babcock InternationalAnnouncement

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RNS Number : 0473Q  Babcock International Group PLC  23 January 2026

23 January 2026

 

 

Third quarter trading update - strong financial and operational delivery
underpins confidence in full year expectations

 

Babcock International Group ("Babcock" or "the Group") provides an update on
trading for the nine months of the financial year ending 31 March 2026.

Trading update to 31 December 2025

Performance through the third quarter has seen a continuation of the strong
performance reported at the half year, with the Group delivering good organic
revenue growth and underlying operating margin progression. With the vast
majority of forecast revenue for the year now contracted, we are confident in
delivering on the Board's expectations for FY26 trading, including meeting the
FY26 margin target of 8%. Should the Indonesian Arrowhead licenses (see below)
be delivered in year, this should provide upside to current expectations.

Strong H1 growth continued into Q3 in Nuclear, driven by new build clean
energy projects and submarine support activities. Growth was also strong in
Aviation, primarily due to the ongoing ramp-up of the French Mentor 2
contract. Marine also reported good growth, reflecting higher LGE volumes and
growth of the Skynet programme. These factors more than offset the expected
lower revenue in Land, due to continuing lower activity in Rail.

Continued strategic and operational momentum support future growth ambitions

Babcock's business momentum and operational performance have continued through
the period with consistent delivery of our unique and critical capabilities
for our customers around the world. The strategic progress we have made and
our expectation of significant opportunities across all of our business into
the medium term support our future growth ambitions. Notable achievements in
the period included:

·      Indonesia Maritime Partnership Programme (MPP): In November,
Babcock was selected as the prime industrial partner for Indonesia's £4
billion Maritime Partnership Programme. This initiative will see the UK and
Indonesia jointly develop maritime capabilities for Indonesia's navy and
fishing fleets, strengthening food security in the process. On 20(th) January
2026, we signed a Letter of Intent covering the aims of the whole MPP and an
agreement for the sale of two further Arrowhead 140 licences to be delivered
in the next few months.

·      Arrowhead programmes: In December, we passed another milestone on
the T31 programme, laying the keel on ship 3, HMS Formidable, in our Rosyth
facility in Scotland. The second ship, HMS Active, is on track for roll out
and steel cut on ship 4, HMS Bulldog, are both expected in the coming weeks.
We continue to progress discussions on our other international naval ship
programme opportunities.

·      US Virginia Class submarine build: We expanded our strategic
partnership with HII to support the US Virginia Class nuclear submarine
programme in Rosyth. The contract will build resiliency within HII's submarine
supply base by authorising Babcock to manufacture and build complex submarine
assemblies at Rosyth for Virginia-class Block VI fast-attack submarines, a
critical component of the AUKUS trilateral partnership between Australia, the
UK and the US.

·     ARMOR Force - positioning for UK Royal Navy (RN) autonomous
transformation: We further enhanced our partnership with HII, and defence
technology company Arondite, to launch the Autonomous and Remote, Maritime
Operational Response - Force, (ARMOR Force) to drive the delivery of a hybrid
navy through the combined use of autonomous and crewed systems in the maritime
domain. The intention is to create a Type 31 Common Command Vessel capability
enabling the RN's latest frigates to control a networked force of large
autonomous vessels and systems to deliver resilient anti-submarine, air
defence and strike capabilities.

·     UK Land programmes progression: Ramp up of the £1 billion
five-year DSG follow-on contract continued through the third quarter. Also in
the period, the first of 53 six-wheeled high mobility Jackal 3 "Extenda"
vehicles for the British Army rolled off our production line in Devonport.

·      FMSP follow on contract: We remain fully engaged with our
customer regarding the follow-on to our largest contract, Future Maritime
Support Programme (FMSP) to support the UK nuclear submarine fleet, which
completes at the end of FY26.

Capital allocation

We couple our operational performance with disciplined capital allocation to
drive shareholder value creation. Of the £200 million share buyback programme
we commenced in Q2, we have returned £90 million to date and intend to
complete the programme around the March year end.

CEO retirement and succession

Today we also announce the decision of David Lockwood, Group Chief Executive,
to retire by the end of this calendar year. Following an extensive internal
and external search process, the Board has chosen Harry Holt, the current CEO
of Babcock's Nuclear sector, as his successor. Please see the full RNS issued
today.

(1) As at 23 January 2026, the average of analysts' forecasts, compiled by
Modular Finance, for FY26 revenue was £5,082 million, (with a range of
£5,026 million to £5,130 million) and for underlying operating profit, £409
million (with a range of £403 million to £416 million). Consensus can be
found on our website at: www.babcockinternational.com/investors/consensus/

ENDS

 

The person responsible for arranging the release of this announcement on
behalf of Babcock is Jack Borrett as Company Secretary.

 

For further information:

Andrew Gollan, Director of Investor
Relations
                                +44 (0)7936
039004

Karen Mitchell, Group Director of Operational Communications
                              +44 (0)20 7355 5312

Harry Cameron, Teneo
 
 
                                +44 (0)20 7353
4200

 

 

Certain statements in this announcement are forward-looking statements. Such
statements may relate to Babcock's business, strategy and plans. Statements
that are not historical facts, including statements about Babcock's or its
management's beliefs and expectations, are forward-looking statements. Words
such as 'believe', 'anticipate', 'estimates', 'expects', 'intends', 'aims',
'potential', 'will', 'would', 'could', 'considered', 'likely', and variations
of these words and similar future or conditional expressions are intended to
identify forward-looking statements but are not the exclusive means of doing
so. By their nature, forward-looking statements involve a number of risks,
uncertainties or assumptions, some known and some unknown, many of which are
beyond Babcock's control that could cause actual results or events to differ
materially from those expressed or implied by the forward-looking statements.
These risks, uncertainties or assumptions could adversely affect the outcome
and financial effects of the plans and events described herein.
Forward-looking statements contained in this announcement regarding past
trends or activities should not be taken as a representation that such trends
or activities will continue in the future. Nor are they indicative of future
performance and Babcock's actual results of operations and financial condition
and the development of the industry and markets in which Babcock operates may
differ materially from those made in or suggested by the forward-looking
statements. You should not place undue reliance on forward-looking statements
because such statements relate to events and depend on circumstances that may
or may not occur in the future. Except as required by law, Babcock is under no
obligation to update (and will not) or keep current the forward-looking
statements contained herein or to correct any inaccuracies which may become
apparent in such forward-looking statements.

 Forward-looking statements reflect Babcock's judgement at the time of
preparation of this announcement and are not intended to give any assurance as
to future results.

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