Babcock International said it was confident about the future after annual profit at the engineering services company rose by almost a third and its order book hit a record £20bn.
For the year that ended in March, underlying pretax profit increased 32% to £418m and revenue rose 27% to £4.5bn. The FTSE 100 company increased its annual dividend by 10.4% to 18.1p a share.
Babcock won more orders from existing customers such as the Ministry of Defence and from its acquisition of Avincis, the emergency helicopter service company, a year ago.
In the UK, Babcock’s new contracts included decommissioning Magnox nuclear reactors and managing London fire brigade’s vehicle fleet. Its biggest customer is the MoD, which outsourced work on aircraft carriers and other navy vessels to Babcock.
Peter Rogers, its chief executive, said the company was in a strong position to do well again this year.
“The nature of our business is we have a £20bn order book so we can see about 80% of revenues for the year, which is a bit higher than normal. Analysts are forecasting somewhere around 10% growth in sales and profit and that seems to me to be a reasonable place.”
Rogers said the new government’s defence and security review was unlikely to damage Babcock’s business. The group has gained work as the government has cut defence spending and farmed out support functions.
“I’m not sure how far the cuts have helped our business but what I would say is I don’t think they have harmed it,” Rogers said.
Babcock is expanding in Europe and wants to carry out more work for the emergency services in France, Spain and Italy.
Rogers said it would be better for business if Britain stayed in the European Union instead of voting to leave in a referendum promised by 2017. The chief executive of JCB said on Monday it would be preferable for the UK to leave than to stay in an “over-bureaucratic” EU.
Rogers said: “I find it difficult to work out why it would be in the interests of the UK to jump ship rather than to engage and make changes. The Brits are as capable of inventing red tape as the guys in Brussels. Things don’t always go your way and people without the UK’s interests [at heart] take decisions that have a great effect but do you deal with them or throw the toys out of your pram?”
