Babcock International Group delivered fiscal year 2025 earnings per share of 16.9 pence, surpassing the consensus estimate of 16.4 pence by 3%.

The company reported revenues of £4.9 billion, matching analyst expectations, with organic growth of 1%.

The company’s adjusted EBITA reached £272 million, slightly above its guidance of £270 million and ahead of the consensus estimate of £267 million. The EBITA margin stood at 5.6%, compared to the consensus estimate of 5.5%.

The earnings beat was attributed to marginally higher EBITA and lower net interest costs of £45 million versus the guided £48 million. The tax rate of 23% aligned with company guidance.

Reported EBITA came in at £246 million, marking a 3% increase and representing a strong year-over-year improvement.

Babcock recorded order intake of £5.5 billion for the fiscal year, up from £4.9 billion in FY24, with a book-to-bill ratio of 114%. The company’s order book grew 9% year-over-year to £14.5 billion, with approximately two-thirds of awards in the defence sector.

Free cash flow reached £219 million, exceeding the consensus estimate of £153 million. Adjusted net debt stood at £206 million, below the consensus estimate of £232 million, resulting in leverage of 0.7 times, which sits below the company’s target range of 1 to 2 times.

The net debt figure includes £245 million in acquisitions of MT&S and a newly announced £75 million share buyback programme.

For fiscal year 2026, Babcock reiterated guidance previously announced in its December trading update. The company expects EBITA of £300 million, slightly ahead of the consensus estimate of £291 million, representing 10% year-over-year growth and implying a 6% margin at the top end of its medium-term range of 5% to 6%.

The guidance is supported by strong order intake in 2025, full-year contributions from the MT&S acquisition, and productivity improvements.

Revenue is expected at approximately £5 billion, with organic revenue growth of 3%. The tax rate guidance remains unchanged at around 25%, with free cash flow expected at approximately £160 million, in line with medium-term targets.

The company updated its year-end net debt guidance to £165 million from £150 million and net finance costs to £52 million from £50 million to reflect the new share buyback programme.