UK-based engineering support services company Babcock International Group Plc (BAB.L) on Wednesday said it traded well throughout the financial year ended March 31, and that the results will be in line with previous expectations and will show strong progress from last year.
In its pre-close trading statement for the year, the company noted that the market conditions have been positive across its businesses.
In both civil and military markets, a number of significant transformation and investment programs are being in progress. As a result, bidding activity remained high throughout the year and the company said it continues to track significant new outsourcing opportunities.
Earlier, in January, Babcock had said that it was confident of meeting its full-year expectations and that all divisions namely Marine and Technology, Defense and Security, Support Services and the International division had been performing well.
Babcock further said its order book at the year end has remained stable at about 12 billion pounds. The company has won or are preferred bidder on contracts valued at over 1 billion pounds since the half year results in November 2012. According to the firm, contracts at preferred bidder stage will transfer into the order book as final contract signature is completed over the next few months.
In addition, the company said its discussions with the Ministry of Defence relating to the Maritime Support Delivery Framework contract are continuing positively. As the new arrangements are expected to become operational later in the financial year, the existing Warship Modernisation Initiative contracts at HMNB Devonport and Clyde have been extended for a further year from April 1.
Babcock's bid pipeline has increased to 15.5 billion pounds from 14 billion pounds announced on January 31, 2013, with the most significant addition of the Logistics and Commodities Services Transformation contract, being bid by the Defence and Security division in a joint venture with DHL.
The company said it has been tracking this opportunity for around 18 months and expect the formal competitive process to run into 2015.
Babcock also said it continues to see other opportunities for Defence and Security moving closer to a formal competitive process.
At the year end, net debt will be approaching 1.5 times ebitda as expected, it said.
The company will release its full year results on Tuesday, May 14.
Looking ahead, Babcock said the scale of its order book continues to provide excellent visibility of future revenue streams, and that the medium to long-term growth opportunities continue to flow into tracking and then into the bid pipeline.
"We remain well positioned to help our customers develop cost efficient support solutions and we believe the current economic climate will continue to create significant medium and long-term growth opportunities for the Group, both in the UK and overseas," the company said in its statement.
In London, Babcock shares are currently trading at 1,096 pence, down 7 pence or 0.63 percent.
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