UK's Babcock International's FY revenue beats analyst expectations

Babcock International

Mon 07:14

Overview
UK defence engineering firm's FY26 revenue grew organically, beats estimates
Underlying profit and EPS were hit by a £140 mln Type 31 contract charge
Company completed £200 mln share buyback, announced further £200 mln buyback for FY27

Outlook
Babcock expects FY27 progress, with about 70% of revenue under contract as of 1 April 2026
Company reaffirms medium-term guidance: mid-single digit organic revenue growth, margin of at least 9%
Company expects average underlying operating cash conversion of at least 80% in the medium term

Result Drivers
TYPE 31 CONTRACT CHARGE - £140 mln charge due to higher-than-expected rework and updated cost estimates on Type 31 frigate programme reduced profit and revenue
NUCLEAR AND AVIATION GROWTH - Strong performances in Nuclear and Aviation segments drove organic revenue growth and margin expansion
LAND SEGMENT RECOVERY - Land revenue declined due to lower civil activity but returned to growth in the second half, with improved margins

Company press release: ID:nRSV1827Ja

Key Details
Metric
Beat/Miss
Actual
Consensus Estimate
FY Revenue
Beat
GBP 5,177.7 mln
GBP 5,172 mln (9 Analysts)
FY Adjusted Net Debt
 
GBP 22.70 mln
 

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 GBp1,400.00, about 33.8% above its June 19 closing price of GBp1,046.00

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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.)