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• Organic Revenue Growth: 11% increase for the period.

• Underlying Operating Profit: Up 10% at constant currency.

• Margins: Flat at 7%.

• Earnings Per Share (EPS): Increased by 14%.

• Cash Conversion: 80%, with favorable timing impacts.

• Free Cash Flow: GBP95 million.

• Gearing Ratio: Reduced to 0.6 times.

• Dividend: Increased by 18% to 2p.

• Marine Revenue Growth: 6% organically, driven by Skynet program.

• Nuclear Organic Growth: 22%, with significant growth in civil nuclear.

• Land Revenue Growth: 9% increase, driven by DSG contract and vehicle volumes.

• Aviation Revenue: Decreased by 4% organically.

• Operating Cash Flow: GBP135 million.

• Pension Deficit: Reduced to GBP160 million on an actuarial basis.

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Release Date: November 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Babcock International Group PLC (BCKIF) reported a strong set of results with an 11% organic revenue growth and a 10% increase in underlying operating profit.

• The company achieved a significant free cash flow of GBP95 million, aided by strong cash conversion at 80% and reduced pension obligations.

• The nuclear sector showed impressive performance with a 22% organic growth, driven by civil nuclear and submarine support volumes.

• The dividend increased by 18% to 2p, reflecting confidence in the company's financial health and future prospects.

• Babcock International Group PLC (BCKIF) has made substantial progress in its medium-term guidance, with strong performance across most sectors, particularly in nuclear and land.

Negative Points

• The order book remained broadly flat, indicating potential challenges in securing new contracts or expanding existing ones.

• Marine sector profits decreased due to the absence of license fees and increased overhead and support expenses, resulting in a low margin of 5.1%.

• Aviation sector revenues declined by 4% due to the transition of the H160 aircraft program to a longer-term support phase.

• The company faces risks of working capital reversal, particularly on large programs, which could impact future cash flow.

• Inflationary pressures remain a concern, although some contracts have been adjusted to mitigate these impacts.

Q & A Highlights

Q: Once HMS Ventura is delivered next year, would you be comfortable in saying that the risk of further provisions to the program is very low? A: David Lockwood, CEO: From an operational point of view, once we've integrated the combat system, the risk is significantly reduced. We are in a much stronger place operationally.