Babcock lifts margin targets as govts ramp up defence spending

(Sharecast News) - UK defence engineering company Babcock said it expected to hit its underlying operating margin of 8% a year early and increased its medium-term target as governments ramp up defence and energy security spending amid global political instability. The company posted a sharp jump in annual operating profit to £364m from £241.6m a year earlier. Its contract backlog was up slightly to £10.4bn from £10.3bn.

The warship and weapons systems maker lifted its medium-term underlying operating margin forecast to at least 9% as western governments deal with threats from Russia and China, along with instability in the Middle East, a major oil supply region.

"This is a new era for defence. There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth," said chief executive David Lockwood.

The company also announced a £200m share buyback.

Reporting by Frank Prenesti for Sharecast.com