Babcock confident after profits rise

11th May 2010 07:56

Engineering support services group Babcock International reported a rise in profits in the year to March 31 and said it expected to see continuing demand for its efficiency-delivering services as pressure on public spending increases.Pre-tax profits rose to £129.2m from £106.7m over the same period a year ago as revenues climbed to £1.923bn from £1.915bn. The firm will pay a dividend of 17.6p, up from 14.4p the previous year.The company, which is proposing an acquisition of fellow support services group VT, saw strong profit and revenue growth in both its marine and defence divisions, which together account for the bulk of the company's revenues.Babcock's main customer in both divisions, the Ministry of Defence, continues to seek efficiencies and cost benefits and Babcock is focused on helping it achieve this, the company said.Revenue climbed by 7% to £958.3m in the marine division and was up by 13% to £383.8m in the defence division. Chief executive Peter Rogers said during a presentation to analysts that, 'we are probably more subject to immediate cost pressures' in the defence division, though the company also benefits from being able to deliver cost savings to customers.In the nuclear division, revenues were up by 9% to £115.9m, but the rail division saw revenues fall by 34% to £150.7m due to some planned withdrawals and the unplanned loss of the high-output track renewal project.Revenues in the networks division, which is engaged in the electricity distribution and telecommunications markets, fell by 6% to £112.6m. Rogers said that the market has been slow recently, but that a new electricity grid will have to be a priority for the incoming government.Revenues in the engineering and plant business were 19% lower at £174.2m from £215.6m previously, due to the impact of the weak economic climate.Across the company future growth is supported by a record order book of £8.3bn across the company, Babcock said.'We consider the major markets in which we operate remain attractive with significant long-term growth prospects,' said Rogers.'We believe that our strong market positions and our track record of delivering efficiencies for our customers will be beneficial as pressure on public spending increases.'