You are here

Prices & Quotes - UK Markets - Babcock International Group (BAB)

Risk Warning The value of investments can fall as well as rise and any income from them is not guaranteed and you may get back less than you invested. Past performance is not a guide to future performance.

Share Price:
Down 296.10p
Change Today:
-5.80p
Market Cap:
1,497.07m
Sector:
Aerospace and Defence

Babcock expects 1.7bn of impairments, aims to avoid equity raise

By Alexander Bueso

Date: Tuesday 13 Apr 2021

LONDON (ShareCast) - (Sharecast News) - Babcock cautioned investors to expect multi-billion pound impairments and charges for the financial year just ended following its contract profitability and balance sheet review (CPBS).
However, management's "aim" was to avoid an equity raise.

The defence engineer's CPBS had flagged 1.7bn-worth of impairments and charges for the year until 31 March.

A "vast majority" of those charges would be one-off and non-cash in nature and would subtract a lower-than-expected amount of approximately 30m from the group's underlying operating profits each year.

To take note of too, the company cautioned that its preliminary full-year numbers might be delayed due to working restraints imposed by Covid-19 and the "large number" of potential adjustments being considered.

Draft unaudited results for the past full-year showed a 3.7% drop in underlying revenues to 4.69bn with operating profits, before the CPBS impact, seen down 22.3% at 307m.

Offsetting the CPBS charges, the engineer said that it would simplify its business and "reduce layers", which was expected to yield about 40m of cost savings annually, albeit only half that amount in the current financial year due to "timing".

Included in those changes were 1,000 fewer employees with the group over the following 12 months at an approximate cost of 40m, mostly in cash.

Asset disposals worth at least 400bn were also on the table.

Nevertheless, management expressed caution about the 2022 financial year because it was expected to be one of "transition".

Its aim however was to return the firm to strength without recourse to an equity issue.

At 1220 BST, the shares were up 34% at 323.50p.



Russ Mould, investment director at AJ Bell, said: "It may seem odd that Babcock's shares are up by quite so much when the firm is flagging 1.7bn of asset write-downs, more than had been rumoured, but plans for 400m of asset disposals and a clear statement that the firm will not need to raise money from shareholders are raising hopes that the worst may be over for the embattled support services group.

"Chief executive David Lockwood's contract profitability and balance sheet review may offer a nod, unintentionally or otherwise, to the report produced by the Boatman Capital in 2018 which criticised Babcock as 'opaque, needlessly complex, needlessly expensive and prone to errors' and alleged over-valuation of contracts. But today's announcement, and the promise of more details alongside the full-year results, may give shareholders a clearer view of how the firm intends to move forward.

"Nor should it be forgotten that Babcock's shares lost half of their value between the release of two papers by Boatman and last autumn. Even the recent rally leaves the shares trading no higher than autumn 2006.

"However, this at least means that expectations are a lot lower, especially as profitability has tumbled in the past two years, the order book has sagged and the dividend been cut."

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.

 

BAB Market Data

Currency UK Pounds
Price 296.10p
Change Today -5.80p
52 Week High 448.70p
52 Week Low 199.00p
Volume 1,424,773
Shares Issued 505.60m
Market Cap 1,497.07m
Beta 0.01

Performance Indicators

Compare performance with the sector and the market.

Key
Vs Market
Vs Sector
Value
market
  1. full market star
  2. full market star
  3. full market star
  4. full market star
  5. half market star
sector
  1. full sector star
  2. full sector star
  3. full sector star
  4. full sector star
  5. full sector star
Price Trend
market
  1. half market star
  2. empty market
  3. empty market
  4. empty market
  5. empty market
sector
  1. empty sector
  2. empty sector
  3. empty sector
  4. empty sector
  5. empty sector
Income
market
  1. full market star
  2. full market star
  3. full market star
  4. half market star
  5. empty market
sector
  1. full sector star
  2. full sector star
  3. full sector star
  4. full sector star
  5. empty sector
Growth
market
  1. full market star
  2. empty market
  3. empty market
  4. empty market
  5. empty market
sector
  1. half sector star
  2. empty sector
  3. empty sector
  4. empty sector
  5. empty sector
Price Chg 6m
market
  1. full market star
  2. full market star
  3. empty market
  4. empty market
  5. empty market
sector
  1. full sector star
  2. full sector star
  3. half sector star
  4. empty sector
  5. empty sector
P/E
market
  1. full market star
  2. full market star
  3. full market star
  4. full market star
  5. half market star
sector
  1. full sector star
  2. full sector star
  3. full sector star
  4. full sector star
  5. full sector star
PEG
market
  1. full market star
  2. full market star
  3. full market star
  4. half market star
  5. empty market
sector
  1. full sector star
  2. full sector star
  3. full sector star
  4. full sector star
  5. half sector star
Dividend Yield
market
  1. full market star
  2. full market star
  3. empty market
  4. empty market
  5. empty market
sector
  1. full sector star
  2. full sector star
  3. full sector star
  4. empty sector
  5. empty sector
EPS Growth
market
  1. full market star
  2. full market star
  3. empty market
  4. empty market
  5. empty market
sector
  1. half sector star
  2. empty sector
  3. empty sector
  4. empty sector
  5. empty sector
Operating Margin
market
  1. full market star
  2. half market star
  3. empty market
  4. empty market
  5. empty market
sector
  1. full sector star
  2. full sector star
  3. empty sector
  4. empty sector
  5. empty sector

What The Brokers Say

Strong Buy 5
Buy 0
Neutral 5
Sell 0
Strong Sell 2
Total 12
buy
Broker recommendations should not be taken as investment advice, and are provided by the authorised brokers listed on this page.

BAB Dividends

  Latest Previous
  Interim Final
Ex-Div 05-Dec-19 04-Jul-19
Paid 17-Jan-20 09-Aug-19
Amount 7.20p 22.90p

Trades for 11-May-2021

Time Volume / Share Price
16:35 403,667 @ 296.10p
16:29 80 @ 297.10p
16:29 223 @ 297.10p
16:29 261 @ 297.20p
16:29 155 @ 297.20p

BAB Key Personnel

Chair Ruth Cairnie
CEO David Lockwood
CFO David Mellors