Babcock International Group (BAB) H2 2024 TU earnings summary

Executive summary

• Organic revenue grew 11% to £4.4bn, with strong underlying results and contract backlog up 9% to £10.3bn.

• Underlying operating profit rose 34% to £238m, including a £90m Type 31 charge and £17m property sale profit; excluding these, underlying operating profit was £311m (7% margin), up from £265m (6.6% margin) last year.

• Free cash flow reached £160m, significantly ahead of expectations, aided by strong working capital and early customer receipts.

• Net debt reduced to £435m (£211m excluding leases), with gearing ratio/net debt to EBITDA at 0.8.

• Guidance for FY25 and medium-term outlook remain unchanged.

Financial highlights

• Revenue: £4.4bn (up 11% organically year-over-year), driven by strong performance in nuclear and land sectors.

• Underlying operating profit: £237.8m (up from £177.9m), margin 5.4% (up from 4.0%).

• Excluding Type 31 loss and property disposal, underlying operating profit was £311m, margin 7.0%.

• Underlying basic EPS: 30.8p (up from 17.7p).

• Full year dividend: 5.0p per share (FY23: nil); final dividend proposed at £0.033.

Outlook and guidance

• FY 2025 cash flow expected to be more H2 weighted, with early customer receipts pulled forward from FY 2025.

• Lower annual pension payments (£25m less per year) will benefit future cash flows.

• Type 31 cash impact of the £90m charge will be spread over the contract's remaining life.

• Expecting further progress in FY25 and reiterating medium-term guidance.