Babcock talks down impact of reported £100m helicopter business write-down

Defence contractor Babcock has played down the impact of a reported £100m write-down of its helicopter business on its bottom line.

The FTSE 250 engineering firm, which revealed the closure of its Appledore shipyard in Devon earlier this month, was expected to announce the drop in value in its half-year results on Wednesday.

Babcock, which holds 128 government contracts including for nuclear and marine defence, said it still planned to exit a number of its small, low-margin businesses including the shipyard, and is reshaping its oil and gas business.

"Whilst the exact impact of these actions has yet to be determined by the board, we do not expect the net cash costs to be material," the company told investors today.

Last week Sky News reported the UK’s second largest defence contractor would take the hit as an impairment charge relating to the Avincis helicopter manufacturing business it bought in a £1.6bn deal in 2014.

Despite a small jump this morning, shares in the firm remain under pressure at lows not seen since 2011, as it deals with the damaging effects a scathing report published last month by an anonymous group calling itself Boatman Capital Research.

The note contained allegations about Babcock’s management and financial situation, including that it overpaid for its last three acquisitions: Avincis, Defence Support Group and vehicle manufacturer MacNeillie.

Babcock last week refuted the claims, calling them “false and malicious statements”. However, analysts at the Royal Bank of Canada backed parts of the research last month, downgrading the firm’s stock in the process.