Babcock International Group (BAB) Trading Update summary

Financial performance

• Revenue reached £4.83 billion, reflecting 11% organic growth at constant currency, with strong contributions from Nuclear and Marine sectors.

• Underlying operating profit rose 17% year-on-year to £363 million, with a margin of 7.5%.

• Underlying operating cash conversion was approximately 80%, aided by working capital timing.

• Underlying free cash flow stood at £153 million, despite a £40 million accelerated pension deficit repair contribution.

• Net debt including leases reduced to £373 million, or £101 million excluding leases, as of 31 March 2025.

Business momentum and contracts

• Contracted backlog increased to £10.1 billion, up from £9.5 billion at HY25.

• Secured a new Mentor 2 contract for French military air training, worth up to €800 million, with £310 million recorded in backlog.

• Won a five-year extension to a UK military land equipment support contract, valued at around £1.0 billion.

• All four business sectors performed well in Q4, including a one-off £5 million benefit in Marine.

Pension and balance sheet developments

• Finalised long-term funding arrangements for all three main pension schemes, including a £40 million deficit repair lump sum in FY25.

• Annual pension deficit repair payments expected to reduce from £40 million to £20 million for the next six years.

• Continued focus on strengthening the balance sheet and de-risking pension obligations.