(Corrects title in third paragraph to finance firector, from
* Bid pipeline 14 bln pounds, vs 13 bln in November
* Order book 12 bln pounds, vs 12.5 bln on Nov. 6
* MoD contract worth 1.5-2.0 bln pounds
* In discussions with Japan over Fukushima work
* Shares up 0.2 percent, hit record high
By Brenda Goh
LONDON, Jan 31 British engineering services
group Babcock International should meet full-year
expectations because the tough economic climate has continued to
throw up outsourcing contracts.
Babcock, which maintains British navy submarines, said on
Thursday its bid pipeline had grown 1 billion pounds ($1.6
billion) to 14 billion since a Nov. 6 update, which should give
a lift to its order book by its March 31 financial year end.
"We remain certainly positive on our outlook for this year
and next. There are plenty of bidding opportunities around and
the pipeline continues to increase," finance director Bill Tame
told analysts on Thursday.
Babcock has been profiting from outsourcing by military and
engineering clients under pressure from tighter budgets to cut
costs. Its order book is now 12 billion pounds, down from around
12.5 billion when first-half results were published on Nov. 6.
It won or was selected as preferred bidder for contracts
totalling 600 million pounds in the October-December period -
its third quarter - and is awaiting decisions on deals totalling
around 800 million by end-March.
The Maritime Support Delivery Framework, a warship and
submarine contract it has been renegotiating with Britain's
Ministry of Defence, would add up to 2 billion pounds to the
order book once signed, Tame said. The contract was expected to
take effect early in Babcock's 2013/14 year.
"Babcock remains a core holding for us due to the longevity
of existing business and the prospect of strong organic growth
as the pipeline converts," Numis analyst Mike Murphy said.
"However, we do not see outperformance in the share price in
the short term given its high rating relative to peers."
Babcock shares, which have risen over 40 percent during the
past year, were 0.2 percent up at 1,034 pence at 0927 GMT, after
touching a record 1,041 pence.
Babcock said it was in talks with Japanese authorities over
nuclear decommissioning work following the Fukushima nuclear
plant meltdown in March 2011.
Tame said Babcock's tie-up with Hitachi, where it
has been helping the Japanese group build nuclear plants in
Britain, had given it a helpful "direct line".
The company said its four divisions were performing well and
in line with expectations although rand weakness could hit its
International unit's full-year results in sterling terms.
($1 = 0.6332 pound)
(Editing by Dan Lalor)