Babcock Says Year Has Started Well, Outlook Upbeat

8th Jul 2010 07:26

By Jonathan Buck Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Engineering support services provider Babcock International Group PLC (BAB.LN) Thursday said its fiscal year had started well and trading had remained resilient, as expected, and it gave an upbeat assessment of its prospects. "Across our businesses we have excellent visibility, supported by the long-term nature of our contracts, a strong order book and robust bid pipeline," the company said in a trading update for the period since March 31. "We believe the outlook for the 2010/11 financial year remains positive and we look forward to another year of good progress." Babcock said that it believes its major markets remain attractive with significant long-term growth opportunities in the U.K. and overseas, and that these opportunities are considerably enhanced by the increased scale and capabilities expected from the roughly GBP1.5 billion acquisition of U.K. rival VT Group PLC (VTG.LN). That deal, announced March 23, is due to complete Thursday with a final court hearing to approve the capital reduction of VT required to implement the associated scheme of arrangement. Babcock said its order book since the start of the year has been stable at around GBP8.3 billion. "We have also maintained a healthy bid pipeline," it added. Like other support services providers, Babcock believes the current environment of fiscal austerity will result in an increase in outsourcing opportunities. It believes it is well placed to take advantage of such opportunities. It added that its financial position remains secure and cash generation across the group had remained strong. It said it will continue to use cash to pay down debt to provide a solid foundation for the group following completion of the acquisition of VT Group. Babcock's shares Wednesday closed at 619 pence. The stock has gained 6.1% in value since the start of 2010. -By Jonathan Buck, Dow Jones Newswires; +44 (0)207 842 9237; [email protected] (END) Dow Jones Newswires July 08, 2010 02:26 ET (06:26 GMT)