July 21, 2014 / 7:36 AM / in 4 years

Babcock order book rises to 13.5 billion pounds

LONDON (Reuters) - British engineering contractor Babcock said on Monday its order book for the coming year had risen to 13.5 billion pounds ($23.1 billion), helped by recent contract wins and its acquisition of helicopter transport firm Avincis.

The 123-year-old group, which generates more than half of its revenue from the UK Ministry of Defense (MoD), said first-quarter trading was in line with its expectations and that its bid pipeline stood at 16 billion.

The company said the completion of its acquisition of Avincis added 2 billion pounds to its order book, and that good progress had been made in the planned refinancing of the helicopter transport firm’s debt.

It is expected to post a pre-tax profit of 418.89 million for the full year ending March 31, according to a Thomson Reuters poll of 10 analysts.

CEO Peter Rogers told Reuters in a interview last week he was aiming for organic or self-generated earnings growth of up to 10 percent.

Babcock has profited over the past few years as military and engineering clients, under pressure from tighter government budgets, outsourced work to cut costs.

The nature of contracts such as warship maintenance and refitting and nuclear decommissioning, which tend to be complex and long-term, has helped it steer clear of the scandals and close scrutiny that have hit some of its biggest outsourcing peers, including Serco and G4S.

Shares in Babcock rose 2 percent to 1123 pence by 0721 GMT, making it the second-highest riser in the FTSE 100 index.

“Babcock’s interim management statement reassures on several fronts,” said analysts at brokerage Jefferies, who have a “buy” rating on the stock.

“Activity levels remain high, key markets remain positive, 2015 full-year trading is expected to be in line with expectations despite recent FX (foreign exchange) movements and integration of Avincis is progressing well,” they added.

Editing by Mark Potter and David Holmes

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