Babcock to complete UK’s largest warship

The company was awarded two weeks ago another contract to supply five new warships for £1.25bn

Engineer Babcock International Group PLC (LON:BAB) is about to complete the Queen Elizabeth aircraft carrier project and said it sees “increased activity” in the marine sector.

HMS Queen Elizabeth, the first vessel in the programme to build the two largest warships in the UK’s fleet, was taken to sea for the first time in June 2017 and starred in a BBC documentary last year.

Its sister ship HMS Prince of Wales is leaving the Scottish port for sea trials, marking the completion of the programme.

The company, which earlier this summer rejected a merger offer from rival contractor Serco Group PLC (LON:SRP), said full-year results will follow the guidance announced in May.

The British Ministry of Defence selected it two weeks ago to provide five new warships for £1.25bn.

Construction work will begin straight after the formal contract award scheduled before year-end.

The civil nuclear business was the weakest in the period since the start of April, as last month the Magnox decommissioning contract was transferred to the UK’s Nuclear Decommissioning Authority after its five-year term.

Babcock announced in 2017 the scope of the work was bigger than initially evaluated and posed legal risks to the contract.

The company also completed its refinancing, issuing £500mln of 8-year bonds expiring in 2027, to increase finance costs by £5mln next in FY20 and £7mln in FY21, to be reduced by £2mln annually afterwards.

Shares in the FTSE 250-listed company were up 4.29% to 564.40 points in early trading on Wednesday.

Source – Proactive Investor