- Defence contractor Babcock announced a £140 million financial hit due to extensive late-stage reworks on its Type 31 frigates being built for the Royal Navy.
- The charge resulted from "higher than expected levels of rework" caused by design changes, making the modifications more complex and costly as they were performed in later stages of construction.
- This significant charge contributed to a fall in Babcock's underlying operating profit to £293 million for the year, down from £363 million previously, and included an estimated £100 million revenue reversal.
- Babcock is constructing five Type 31 frigates at its Rosyth site, with the first two ships being the most impacted by the reworks, while the third and fourth are still in early construction stages.
- Despite the frigate contract issues, Babcock reported an overall increase in revenues, particularly driven by stronger performances in its nuclear and aviation divisions, and plans to return a further £200 million to shareholders through buybacks.
IN FULL
Babcock takes £140m hit from reworks to new Royal Navy warships
