Babcock charts its way back to success with plan to bolster earnings growth

Defence giant Babcock International has outlined plans to boost profit growth by four per cent by 2024.

The company today drew up a series of medium-term targets designed to boost growth between three and four per cent. It hopes to bolster total revenues to more than 85 per cent. They currently sit at 75 per cent. This would come from its three key divisions of defence, emergency services and nuclear.

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Babcock also plans to expand abroad. It hopes to increase overseas revenue from 30 per cent of group turnover currently, to more than 40 per cent.

Shares rose 2.8 per cent on the news.

Babcock cut its outlook last month, and reported a 47 per cent slump in operating profit over the last year. Exceptional charges of £161m took their toll, as it tried to reshape various parts of the business, deal with new pension reporting rules and set money aside for a potential no-deal Brexit.

Last week RBC Capital Markets analyst Andrew Gibb questioned Babcock boss Archie Bethel’s description of the full-year results as “robust”, suggesting a change at the top of the company.

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“Last week’s results underlined again why change is required at the helm of Babcock,” he said. “With profits up every year since 2015 and the share price more than halving, something has to give.”

The criticism came on the back of Babcock’s shares hitting decade-long lows of 416.7p last week.