Babcock International Group (BAB) H2 2026 TU earnings summary

Executive summary

• Achieved strong operational and financial performance, with 10% organic revenue growth and notable strength in Nuclear and Aviation segments, surpassing mid-single digit growth guidance.

• Strategic international relationships expanded, including partnerships with Saab, HII, French partners, and significant progress in Indonesia and civil nuclear sectors.

• Underlying results were partially offset by a non-recurring GBP 140 million Type 31 contract charge, fully recognized in FY26.

• Announced a further GBP 200 million share buyback following completion of a previous GBP 200 million program, reflecting robust balance sheet and cash generation.

• Maintained strategic and operational momentum, reinforcing positions in key markets.

Financial highlights

• Organic revenue grew 10% year-over-year to GBP 5,273 million, driven by strong performances in nuclear (+14%) and aviation (+34%), with marine up 8% and land down 3% but returning to growth in H2.

• Underlying operating profit rose 19% to GBP 433 million before the Type 31 charge; including the charge, profit was GBP 293 million.

• Underlying operating margin reached 8.2% excluding the Type 31 charge (5.7% including it), up 70 basis points year-over-year.

• Underlying free cash flow increased to GBP 262 million, with operating cash conversion at 85%.

• Net debt at year-end was GBP 329 million, with gearing at 0.2.

Outlook and guidance

• Reconfirmed medium-term guidance: average revenue growth of mid-single digit, underlying operating margin of at least 9%, and operating cash conversion of at least 80%.

• FY 2027 expectations unchanged, with 70% of revenue under contract at the start of the year.

• Positive outlook supported by a strong backlog and ongoing international opportunities, including anticipated Indonesian license fees in early FY 2027.