Defence giant Babcock International has posted a rise in full-year revenues and announced a new £200m share buyback scheme, as outgoing chief executive David Lockwood prepares to retire.
Financial Performance
For the year ending March 31, 2026, Babcock reported revenues of £5.1bn, an eight per cent increase on the previous year, driven by its nuclear and aviation divisions. However, underlying operating profit fell to £293m from £362.9m, impacted by a £140m charge on a Type 31 contract.
The company hailed its performance amid an 'increasingly uncertain geopolitical backdrop', with Lockwood stating: 'Against an increasingly uncertain geopolitical backdrop, Babcock has delivered continued strategic and operational progress.'
Share Buyback and Dividend
Following the successful completion of a previous share buyback programme in April, Babcock launched a further £200m buyback. The company also increased its full-year dividend by 15 per cent.
Operational Highlights
During the period, Babcock ramped up its £1bn DSG British Army vehicle support contract and increased activity at Hinkley Point C nuclear plant in Somerset under the MEH alliance. The company also reopened Devonport's 15 Dock facility, enhancing submarine maintenance capability.
Lockwood added: 'We achieved strong underlying growth, improved margins and robust cash generation, while securing important contract wins that further strengthen our position in defence and nuclear markets, where long-term demand is increasingly structural.'
Leadership Transition
David Lockwood, who announced his departure in January, will retire at the end of the year after overseeing a sixfold rise in the company's share price during his five-year tenure. He will be succeeded by former Army officer Harry Holt, currently chief executive of Babcock's nuclear arm. Holt was appointed deputy chief executive in April and will take up the top role on August 1.
Outlook
For FY27, Babcock expects 'another year of good progress', with around 70 per cent of revenue under contract in April, similar to the previous year. The company reaffirmed its medium-term guidance of average mid-single digit organic revenue growth, underlying operating margin of at least nine per cent, and average underlying operating cash conversion of at least 80 per cent.
Lockwood concluded: 'With our core capabilities aligned to our customers’ evolving priorities, we are building a high-quality pipeline of long-term growth opportunities. Babcock is a more resilient business today, with clear momentum and strong visibility. Our people remain our most important asset, and we continue to build a talent-led culture with the right skills, capability and leadership. I leave with confidence that the group is well positioned for its next phase of delivery, growth and value creation.'
