BABCOCK International has said uncertainty on the global political stage could bring further business opportunities in an update of the first five months of this year.
It said trading continues to be in line with the board's expectations for the full year but added the market backdrop is “dynamic”.
Babcock said: “Ongoing geopolitical uncertainty is leading to increased national defence requirements and potentially more opportunities, while macro factors such as inflation and supply chain stress increase delivery challenges.”
Order momentum “remains good”, it said, adding: “We have won a number of new contract awards in the period, including a 10-year support contract for the Queen Elizabeth class aircraft carriers, multiple orders for LGE equipment, two further contracts relating to Poland's frigate programme, Miecznik (Swordfish), and renewal of the Royal Air Force's Hawk fleet support contract at RAF Valley, in an 11-year agreement.”
READ MORE: Scottish shipyard wins European frigates contracts
Babcock started building the first of five Royal Navy frigates at Rosyth under the UK Type 31 programme and is supporting the construction of three vessels marketed as Arrowhead 140 frigates in Polish shipyards.
A deal with Ancala Partners for the sale of aerial emergency services for a cash consideration of €136.2 million is expected to be complete by the end of the calendar year.
"Operating profit is being driven by our focus on execution and the efficiencies we are realising from our new operating model,” Babcock said. “As previously guided, we anticipate a net cash outflow in the first half of [full year] 2023, reflecting the timing of pension deficit payments, with a return to positive free cash flow in the second half.
"Overall, our expectations of trading for the full year are unchanged.”
Shares in Babcock closed down 1.8p, or 0.59 per cent, at 304.2p.
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