23 May 2018 – final results
A solid performance has been produced by the defence support services group in the year to 31 March with underlying revenue rising by 2.8% to £5.36bn (2017: £5.22bn) and underlying pre-tax profits increasing by 3.6% to £512.5m (2017: £494.8m). Earnings per share on the same basis increased by 3.6% to 83.0p (2017: 80.1p) and the total dividend for the year was raised by 4.8% to 29.5p (2017: 28.15p), the 17th consecutive increase in the pay out. These are clearly very respectable results and have benefited from the group’s strong relationship with the MoD whilst Babcock is also extending its operations internationally acting for defence departments of other countries including France, Canada and New Zealand. The share price of the company has fallen over recent months due mainly to unfair comparisons with other companies in the sector such as Carillion Serco and Interserve but Babcock is very different to all of these. The shares have fallen from a high of over 1100p two years ago and we rate the stock a BUY.