British aerospace and defence company Babcock has disclosed “strong” financial performance with full year fiscal 2025 (FY25) results ahead of its upgraded guidance.
The company said revenue and underlying operating profit grew “above expectations” at the start of the year, and the overall cash generation was “better than forecast”.
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During the fiscal ending 31 March 2025, the company’s total revenue reached £4.83bn ($6.6bn), marking an organic growth of 11% from the £4.39bn recorded in the previous year.
This revenue uptick is attributed to significant growth within the Nuclear and Marine sectors.
The statutory operating profit for the company saw a substantial rise of 51%, culminating at £363.9m over the fiscal period. The previous fiscal year included two exceptional items: a contract loss valued at £90m and a one-time gain of £17m from the disposal of property.
Basic earnings per share for Babcock were reported at 49.1p in FY24, which is an increase from 32.9p in FY23.
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By GlobalDataThe company’s underlying operating profit for the fiscal surged by 53% to £362.9m. When excluding the non-recurring items mentioned earlier from FY24, this figure represents a 17% increase.
In addition, Babcock’s underlying operating margin experienced an enhancement of 50 basis points to reach 7.5%, when setting aside the non-recurring items of FY24. This improvement was seen across Nuclear, Land, and Aviation divisions.
The contract backlog for Babcock showed a marginal increase to £10.4bn in FY25 compared with £10.3bn in FY24. This slight rise is reflective of confirmed orders associated with the five-year extension of the DSG contract and the Mentor 2 contract in France.
Babcock also reported a reduction in net debt excluding leases by £110m, bringing it down to £101m.
Babcock chief executive officer David Lockwood said: “Our strong financial performance in FY25, with operational momentum across the business, has enabled us to upgrade our medium-term guidance, increase our dividend and launch a £200m share buyback programme for the first time in the company’s history. We look forward to continuing our track record of profitable growth, and to investing in the people and capabilities that will create value for all our stakeholders.”
In its new medium-term guidance, Babcock has set expectations for an average revenue growth in the mid-single digits and aims for an underlying operating margin of at least 9%—an increase from the previously stated target of at least 8%.
For FY26, Babcock anticipates reaching its prior medium-term goal of an underlying operating margin of 8% at least one year ahead of schedule.
In April2025, the UK Ministry of Defence awarded Babcock a proof-of-concept contract to facilitate 3D printing of military equipment for Ukrainian armed forces.
