Babcock International Group (BAB) H2 2026 TU earnings summary

Executive summary

• Achieved strong operational and financial performance in FY26, with 10% organic revenue growth and notable strength in Nuclear and Aviation segments.

• Strategic international progress included partnerships with Saab, HII, French partners, and advancing the Indonesia program.

• Announced a further GBP 200 million share buyback following completion of a previous GBP 200 million program.

• Type 31 frigate program faced a GBP 140 million charge due to rework and updated risk contingencies, fully recognized in FY26.

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

Financial highlights

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

• Underlying profit increased 19% to GBP 433 million before Type 31 charge; margin up 70bps to 8.2%.

• Underlying free cash flow reached GBP 262 million, with 85% cash conversion (excluding Type 31 impact).

• Net debt at year-end was GBP 329 million; gearing at 0.2x.

• Completed a GBP 200 million share buyback; new GBP 200 million buyback announced.

Outlook and guidance

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

• FY 2027 expectations unchanged; 70% of FY 2027 revenue already under contract as of April 1, 2026.

• Positive outlook supported by a strong opening backlog and ongoing international opportunities.