Babcock loses high output rail contract

30th Sep 2009 07:10

Support services specialist Babcock has lost its contract with Network Rail for High Output Track Renewal operations, but trading overall is as expected.Network Rail told it today that its Babcock SB Rail joint venture with Swietelsky Baugesellschaft had lost the contract, it said. Amey Colas is Network Rail's new preferred bidder for the £250m contract.As a result, its Rail division will withdraw from the High Output track renewals market. This is expected to impact the division's reported operating profit in the current financial year by around £1.5m and £2m in the 2010/11 financial year, inclusive of restructuring costs, (revenue £10m and £35m respectively). Babcock adds it is reviewing options for the division.Elsewhere, trading is in line. Revenue growth in the Marine and Defence divisions has been strong though revenues were lower in Rail and in the Equipment business in South Africa. Aside from those areas, market conditions have generally remained resilient and margins strong the statement said.