Babcock International Group PLC
01 April 2008
1 April 2008
Babcock International Group PLC
Trading Update
Babcock International Group PLC (Babcock) is providing the following update on
trading as it enters its close period prior to announcing Preliminary Results on
13 May 2008.
We anticipate that results for the year ended 31 March 2008 will be in line with
our expectations. Trading has continued satisfactorily since the time of our
Interim Management Statement on 29 January 2008.
Marine
The new management structure for Babcock Marine is in place and the operations
at Devonport have been fully integrated into the division. We have noted the
commitments made by Ministers and the Ministry of Defence to the future of
Devonport and continue to look forward with confidence to long-term work streams
at the dockyard. Marine has traded well throughout the year benefiting from
steady warship refit work at Devonport and Rosyth and submarine refuelling and
maintenance work at Devonport and Faslane. Negotiations with the Ministry of
Defence relating to the Terms of Business Agreement for submarine support
continue to progress, although we would not expect these to be concluded until
the second half of the calendar year.
We remain confident that the manufacturing contracts for the CVF (Future
Aircraft Carrier) will be signed shortly. In February the civil engineering
contract for the modifications to the dock area at Rosyth was signed, witnessed
by the Secretary of State for Defence. The cost of the works, which will enable
the assembly of the new carriers, is being paid for by the Ministry of Defence.
This marks a significant milestone in the CVF project.
Nuclear
From 1 April a separate division will be created to combine our civil nuclear
capabilities. This reflects the position of strength we have built in the civil
nuclear engineering market through the acquisitions of Alstec and INS adding to
our existing capabilities. We believe this market holds significant
opportunities for us in the future.
Defence Services
The division has traded steadily throughout the year with the multi activity
contracts and the two Regional Prime contracts performing in line with
expectations. The Building Schools for the Future (BSF) contract with Hackney
is moving towards financial close and the bid process for BSF Southwark is
proceeding as planned. The Royal School of Military Engineering PPP continues
to progress well with financial close planned by the end of June.
Rail
As we anticipated, the division has improved its performance significantly and
has traded profitably throughout the second half. Work carried out by the
division during the Christmas and Easter periods was all completed on time and
within budget.
Engineering and Plant
The opportunities for continued growth are strong. The South African government
remains committed to increase significantly the supply of electricity throughout
the country. We are well positioned to support Eskom and the OEM suppliers in
the construction of new generation capacity, as well as in the recommissioning
of mothballed power stations and the provision of outage support on operational
power stations. The Powerlines business has shown strong growth with a
significant increase in the order book throughout the year.
The demand for Volvo equipment has increased further over the most recent
quarter, with a record number of orders being taken in February. There are
currently no signs of a weakening in demand.
Networks
The division has traded steadily through the year. In the transmission business
the Electricity Alliance with National Grid and the alliance with EDF Energy
Solutions continue to operate smoothly. In addition we have been successful in
winning further contracts with Scottish Power. Access to skilled resource
remains an issue across the industry. To alleviate this situation we are
seeking to expand our design office in Sofia, Bulgaria as well as maintaining a
significant training programme to provide the necessary levels of support for
the division.
In the communications business, as signalled previously, the mobile
telecommunications market has continued to be slow although we are starting to
see a number of new opportunities coming through. The broadcast market remains
active in preparation for the completion of Digital Switchover by 2012.
Outlook
The markets in which we operate are attractive. The strong positions we hold in
these markets and the long-term relationships we have developed with our key
customers have underpinned our performance in the year just ended and make us
confident of further progress in the new financial year.
Enquiries
Babcock International Group PLC 020 7291 5000
Peter Rogers Chief Executive
Bill Tame Finance Director
FD 020 7269 7121
Richard Mountain
This information is provided by RNS
The company news service from the London Stock Exchange
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