Babcock International Group (BAB) H1 2025 earnings summary

Executive summary

• Achieved strong revenue and profit growth, with 11% organic revenue increase to £2,409m and significant progress toward medium-term guidance.

• Underlying operating profit rose 9–10% to £168.8m, and EPS increased 14% to 23.5p year-over-year.

• Free cash flow reached £94.7–95m, supported by 80% cash conversion and reduced pension obligations.

• Dividend increased by 18% to 2.0p per share, reflecting confidence in ongoing performance.

• Strong performance in Nuclear and Land segments; Marine and Aviation faced margin pressures due to contract phasing and one-off items.

Financial highlights

• Revenue up 11% year-over-year to £2,409m, with three of four sectors growing, especially Nuclear (+22%) and Land (+8–9%).

• Underlying operating margin stable at 7.0%, with prior period benefiting from high-margin license sales.

• Net debt (excluding leases) reduced to £146m; net debt/EBITDA at 0.6x.

• Contract backlog stable at £9.5bn; c.90% of FY25 revenue under contract.

• Interim dividend per share up 18% to 2.0p.

Outlook and guidance

• FY25 expectations unchanged, with 90% of revenue under contract at the half-year mark.

• Full-year free cash flow expected to be H1 weighted due to timing differences.

• Medium-term guidance: operating margin ≥8%, cash conversion ≥80%, and mid-single digit average annual revenue growth.