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Highlights:

  • BAB’s FY25 revenue rose 11% YoY on an organic basis, primarily driven by growth in its Nuclear and Marine segments.
  • The company announced a GBP 200 million share buyback program scheduled to commence in FY26.
  • BAB recommended a final dividend of 4.5 pence, bringing the total FY25 payout to 6.5 pence, up from 5.0 pence in the prior year.

Babcock International Group PLC (LSE: BAB) is a UK-based aerospace, defence, and nuclear engineering services company, providing critical support to national defence, emergency services, and civil nuclear sectors through engineering, equipment management, and training solutions.

The company has announced its preliminary financial results for the year ended 31 March 2025, reporting significant year-on-year growth across revenue, operating profit, and cash flow. The group also unveiled a GBP 200 million share buyback and increased its final dividend by 30%, citing improved operational performance and balance sheet strength.

The company’s contract backlog stands at GBP 10.4 billion, supported by new awards in the Land and Aviation divisions, which have offset long-term contract executions. Revenue for the period increased by 11% YoY on an organic basis, primarily driven by growth in the Nuclear and Marine segments. Statutory operating profit rose by 51% YoY to GBP 364 million, with underlying operating profit climbing 53% YoY to GBP 363 million. Excluding non-recurring items from the previous financial year, underlying profit showed a 17% increase.

The underlying operating margin reached 7.5% YoY, a 50-basis point improvement year-on-year. Margins were lifted by improved performance across the Nuclear, Land, and Aviation sectors. Underlying earnings per share came in at 50.3 pence, marking a 23% YoY rise after adjusting for the prior year's one-off items, attributed to higher profits and reduced interest charges.

The company reported underlying free cash flow of GBP 153 million, with an 82% operating cash conversion rate. Net debt, excluding leases, was reduced by GBP 110 million to GBP 101 million, resulting in a gearing ratio of 0.3x, compared to 0.8x in FY24.

A final dividend of 4.5 pence per share was recommended, bringing the total for the year to 6.5 pence, up from 5.0 pence previously. The newly announced share buyback program of GBP 200 million is planned for execution during FY26.

Following consistent performance against previous targets, Babcock has updated its medium-term guidance. The company now anticipates an underlying operating margin of at least 9% (up from 8%), with average revenue growth in the mid-single digits and operating cash conversion of at least 80%.

This revised guidance is supported by a strong near-term pipeline and a favourable industry environment, with increased global emphasis on defence and energy security.

The group has undertaken several strategic initiatives during the year, including the formation of the H&B Defence joint venture with HII in Australia and a memorandum of understanding with Patria to offer the 6x6 Armoured Personnel Carrier to UK Armed Forces. It also launched a regional hub for nuclear skills in the Southwest and opened a Submarine Availability Support Hub in Bristol.

Babcock expanded its General Logistics Vehicle range with the launch of a medium wheelbase model and plans for a six-wheel variant. The company also introduced the Babcock Immersive Training Experience (BITE), enhancing capabilities in both individual and collective training.

Looking ahead, Babcock expects to achieve its previous margin target of 8% during FY26 one year earlier than planned.