Engineering group Babcock International has revealed a 64% plunge in half-year profits after charges linked to its overhaul and it warned over nuclear decommissioning revenues.
Shares fell as much as 12% after the group - the Ministry of Defence's second largest contractor - reported pre-tax profits falling to £65.1 million in the six months to September 30, down from £181.9 million a year earlier. They recovered partially from the day's lows but nevertheless finished down 5% on the session at 566p.
Profits were pushed lower by a £120 million charge related to the restructuring of its oil and gas business and also including costs such as its decision to sell the Appledore shipyard in Devon.
On an underlying basis, Babcock posted a 2.5% rise in pre-tax profits to £245.5 million.
Babcock stuck to its guidance for the full year, with "low single digit" percentage growth in underlying organic revenues expected and improved profit margins.
But the firm worried investors as it cut its 2019-20 guidance for revenue from its joint venture for decommissioning of Magnox nuclear sites in the UK.
The contract is due to end in August 2019 and Babcock does not now expect any additional revenue after that date.
This means the "step down" in revenues is set to be greater than first thought, at £250 million in 2019-20 against previous forecasts for £100 million, with an associated £20 million hit to its operating profit.
Chief executive Archie Bethel said: "We are taking decisive actions to further strengthen the group, which will deliver benefits next year and beyond."
Analysts at Liberum said the first-half results were in line with expectations, though they trimmed their 2019-20 forecasts on the worse-than-expected nuclear outlook.
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