Babcock suspends decision on dividend amid coronavirus uncertainty
Engineering giant Babcock has pulled its final dividend until it has more clarity on the financial damage wrought by the coronavirus pandemic.
The London listed firm swung to a full year loss of £178m, causing shares to sink four per cent in morning trading.
It also warned it would need to cut costs in in its oil and gas, aviation and civil nuclear businesses.
The figures
Babcock swung to a pre-tax loss of £178.2m for the year ending 31 March, compared to £235.2m last year.
This came after writing down the value of its aviation unit and other exceptional restructuring charges.
Stripping out exceptional and other one-off items, underlying pre-tax profit was £428.4m, it said.
Revenue for the year was stable, at £4.45bn compared with £4.47bn the year before.
Babcock’s combined order book and pipeline as of March 31 stood at £35bn.
Net debt at the year-end was £922.1m.
Why it’s interesting
Babcock said that it was deferring the decision on its final dividend until the COVID-19 situation becomes clearer.
It also said it would not be providing financial guidance for the upcoming financial year for the same reason.
The majority of the company’s work – particularly in defence – was declared to be critical when the pandemic broke out, and many of its employees were declared key workers.
All major sites have remained open through the lockdown and Babcock has continued to work on major defence programmes, design new systems, to provide emergency services and to keep nuclear power sites operational.
Chief executive Archie Bethel said the group had contributed to the fight against the pandemic with new innovative technical solutions.
These include the introduction of biocontainment isolation stretcher units which allow covid-positive patients to be transported safely and new in-helicopter barrier systems which give added protection to flight crews and medical staff.
What Babcock said
Bethel said: “Chief executive Archie Bethel said: “We end a busy year in a strong position to deal with the current coronavirus uncertainty.
“We saw strong performances across our marine, nuclear and land sectors and have taken action to address weaknesses in aviation, including writing down goodwill to reflect our updated expectations of the oil and gas market.
“The early impact of the global Covid-19 pandemic had a limited impact on the group in the last financial year but is creating uncertainty as we head into this new financial year.
“I am immensely proud of the way our people have responded in these challenging times.
“At Babcock we pride ourselves on the fact that we support customers responsible for providing critical services: our work in defence and aerial emergency services saves lives, supports national defence and protects communities.
“As always, my priority, and the priority of the group, is to keep our people safe whilst making sure that those vital services can continue.”