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CORRECTED-UPDATE 1-Babcock sees buoyant outsourcing market, confident on year ahead
May 19, 2014 / 9:07 AM / 3 years ago

CORRECTED-UPDATE 1-Babcock sees buoyant outsourcing market, confident on year ahead

(Corrects surname of CEO to Rogers)

By Li-mei Hoang

LONDON, May 19 (Reuters) - British engineering contractor Babcock said on Monday it was confident about its prospects for the year ahead after it posted a 15-percent rise in annual profits and raised its dividend.

The 123-year-old defence, support services and engineering contractor said it expected to make strong progress in its new financial year and would see significant growth from its acquisition of helicopter transport firm Avincis.

It also said it saw a buoyant market for its nuclear, defence and marine businesses.

“It was more of a decent year. The growth we got was pretty broad-based, the organic growth was good and to add to that, the acquisitions we made, I think that it is a decent picture,” CEO Peter Rogers told Reuters.

Babcock, which generates more than half of its revenue from the Ministry of Defence (MoD), has profited over the past year as military and engineering clients, under pressure from tighter government budgets, outsourced work to cut costs.

It has also avoided scandals that have hit some of its biggest outsourcing rivals such as Serco and G4S .

The company was awarded a 7-billion pound contract, alongside U.S. group Fluor, to manage the decommissioning of nearly half of Britain’s nuclear sites - one of the largest UK government contracts ever put out to tender.

Rogers said Babcock was still considering bidding to buy the MoD’s military equipment maintenance arm, which Jefferies analysts said could generate 3 billion pounds in revenue over 10 years.

Babcock said revenue grew 9 percent to 3.5 billion pounds ($5.89 billion) and its bid pipeline stood at 17.5 billion.

Pretax profit rose to 316.1 million pounds from 275 million and beat the 305.56 million expected by analysts polled by Reuters. It also raised its full-year dividend by 14 percent to 16.4 pence per share.

Shares in Babcock were down 0.8 percent to 1178 pence at 0831 GMT.

“Babcock has delivered a solid set of results, which are slightly ahead of our forecasts across the board,” said Panmure Research analyst Mike Allen.

$1 = 0.5942 British Pounds Reporting by Li-mei Hoang; editing by Jason Neely

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