Engineering and defence giant Babcock International lit a £330million fuse under its share price yesterday after revealing “good growth” in its core business and a profits boost from Avincis, the owner of North Sea helicopter firm, Bond.
The firm, whose largest customer is the Ministry of Defence (MoD), pleased investors when it said its operating profits in the first half of the year were boosted 39% to £239.5million with the helicopter business, rising 10% on like for like terms excluding the performance of Avincis.
Peter Rogers, chief executive, said the £1.6billion deal to acquire Avincis had strengthened the UK firm’s international position.
He added: “We achieved strong organic growth in both revenue and profit, with all our existing core businesses continuing to move forward.
“Avincis made an excellent start under our ownership and has fulfilled our expectations at the time of acquisition.”
Mr Rogers said he expected to see a further 20% growth in profits in the second half at Avincis.
John Lawson, an analysts with Investec, said the firm’s profits to the half year to the end of September 2014 beat its expectations of £165million, adding that the helicopter business will “inflate this figure going forward as it is a higher margin activity”.
The defence, support services and engineering contractor has profited over the past year as military and engineering clients, under pressure from tighter government budgets , have outsourced work to cut costs.
The 123-year-old company repairs and maintains Britain’s submarines and on Wednesday said it was the preferred bidder for the sale of the MoD’s business that repairs and maintains equipment for land forces.
Babcock raised its interim dividend by 10% to 5.5p and said its order book had increased sharply to £18.5billion, up from £13.5billion in July.
The firm’s shares rose 5.9% to 1,184p, adding more than £330million to its value.
Recommended for you
