UK's Babcock FY26 EBIT beats on nuclear and aviation strength

Babcock International

13/05/2026 07:18

Overview

UK defence contractor's FY26 adjusted EBIT beat analyst expectations

Company took £140 mln charge on Type 31 contract, offsetting strong operational performance

Completed £200 mln share buyback, announced new £200 mln buyback programme

Outlook

FY27 expectations are unchanged, with about 70% of revenue under contract at April 2026

Company maintains medium-term guidance of average revenue growth of mid-single digit percentage

Company targets underlying operating margin of at least 9% and cash conversion of at least 80%

Result Drivers

NUCLEAR AND AVIATION GROWTH - Strong performance in Nuclear and Aviation sectors drove organic revenue growth and higher underlying profit

TYPE 31 CONTRACT CHARGE - £140 mln charge on Type 31 contract offset strong underlying results, mainly impacting Marine segment

AVIATION CONTRACTS - Revenue in Aviation rose 34% due to ramp up of Mentor 2 programme in France, British Columbia helicopter emergency services contract in Canada, and increased scope in UK military support contracts

Company press release: ID:nRSM1359Ea

Key Details

Metric
Beat/Miss
Actual
Consensus Estimate
FY Adjusted EBIT
Beat
GBP 433 mln
GBP 414.86 mln (9 Analysts)
FY Adjusted EBIT Margin
8.20%
FY Order Backlog
GBP 9.60 bln


Analyst Coverage

The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 8 "strong buy" or "buy", 1 "hold" and no "sell" or "strong sell"

The average consensus recommendation for the aerospace & defense peer group is "buy"

Wall Street's median 12-month price target for Babcock International Group PLC is GBp1,554.00, about 54.3% above its May 12 closing price of GBp1,007.00

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)