Babcock hopes for brighter FY2022

Babcock revealed its latest annual financial results on 30 July, showing that group-wide revenues dropped by about 6% year on year (£4.18 billion for 12 months ended 31 March 2021 compared with £4.43 billion in 2020).

Underlying operating profits fell by 40%, partially due to a £46 million impact from the COVID-19 pandemic.

Efforts to realign the business in FY2021 will continue in FY2022, said Babcock CEO David Lockwood, meaning that the year ahead will be one of ‘transition’.

He added that Babcock remains uncertain of the impact of COVID-19 on performance in FY2022.

Activity across defence was ‘broadly flat’ in the year, Babcock noted, with work continuing in the UK on Hawk flying training and base support contracts.

Discussions continue on a longer-term Hawk support contract for the next decade.

Other UK defence highlights for Babcock in FY2021 included a contract under the Land Environment Tactical Communications and Information Systems programme and down-selection for the Skynet 6 Service Delivery Wrap contract, with a final submission expected in October 2021.

Abroad, Babcock won new business in France, Australia and South Korea in FY2021.

The contract backlog for Babcock stood at £8.7 billion by 31 March, but there have already been some significant developments in the early months of FY2022.

Babcock is lined up as prime contractor for major naval programmes in Ukraine after a Memorandum of Implementation was signed in June.

The company also reported progress in pilot training programmes in France (with a five-year, €500 million deal) and Canada.

Looking ahead, Babcock plans to cut steel on HMS Venturer ؅— the first Inspiration-class frigate for the UK RN ؅— in September, and it stated that ‘active discussions’ on Type 31 exports are in progress with Greece, Indonesia and Poland.

Babcock also awaits the outcome of its bid for the Maritime Electronic Warfare Systems Integrated Capability, and it expects the Future Maritime Support Programme for the RN to be finalised ‘this summer’, with an interim agreement already in place.

‘Our contract backlog is expected to increase significantly once this contract is signed,’ it added.