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Babcock International - Sharp reduction in borrowings

January 2010

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • BAB
  • Price:
  • 607p
Since our last update two months ago, shares in defence services firm Babcock have risen nearly 50p. This momentum was driven by interim results, which noted a 24% increase in pretax profit to £71.8m. Eps improved 24% to 25p, while net borrowings reduced sharply from £374m to £314m. Meanwhile its order book was maintained at £6bn.Babcock is a major beneficiary of the MoD's desperate need to outsource non-essential services in order to cope with budget squeezes. Marine, its warship refit and maintenance division, grew operating profit 29% to £54.3m (60% of profit). This arose as a result of steady work on surface ships and submarines, as well as substantial design work on the new Queen Elizabeth aircra ...

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