Babcock maintains guidance on defence momentum, major contract wins

Babcock International Group PLC on Wednesday said it expects to meet its guidance and is "excited" about future opportunities.

Ahead of its annual general meeting later on Wednesday, Babcock said trading had been in line with expectations for the first five months of financial 2027 and that full-year and medium-term guidance remained unchanged.

The London-based aerospace, defence and nuclear engineering company said it had maintained good momentum in the period, with strong performances in the nuclear and aviation businesses and robust demand across its core defence markets.

Babcock highlighted it had been awarded a CAD1.2 billion, around £600 million, six-year extension to support the Royal Canadian Navy's Victoria Class submarines. The contract could be extended until the fleet's end of life, estimated in the late 2030s, Babcock said.

The group also said it had been selected as preferred bidder for an eight-year French Air Force combat training contract.

The defence contractor said it had welcomed the UK government's June plan for defence investment but added it expects further clarity on funding in the 2026 UK budget.

Babcock said it is well placed to benefit from the £26 billion UK Royal Oak programme, a 10-year plan to modernise naval infrastructures including HMNB Clyde and HMNB Devonport, which Babcock operates.

Harry Holt, who became chief executive officer on July 31, said: "In this era of global tension and the rapidly changing nature of warfare, our priorities are clear: deliver for our customers, strengthen programme performance, maintain capital allocation discipline and convert our strong market positions into long-term growth. I am excited about the opportunities ahead.”

Holt replaced David Lockwood, who Babcock said will remain with the company to further support the succession until his retirement in January 2027.

Babcock said it expects to complete its current £200 million share buyback programme launched in July by the end of financial 2027.

The company said it will publish results for the first half on November 19.

In June, Babcock said it anticipated "another year of good progress" in financial 2027, supported by strong revenue visibility with around 70% of expected revenue already under contract as of April 1.

The company had also reaffirmed its medium-term targets of average mid-single-digit organic revenue growth, an underlying operating margin of at least 9%, and average underlying operating cash conversion of at least 80%.

Babcock shares were trading 0.3% higher at 996.20 pence on Wednesday morning in London.

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