Babcock International Group Plc · LSE:BAB
Babcock International — H1 FY26 Earnings Presentation
40 slides from Babcock International's earnings presentation, Nov 13, 2024
Slide 1: HY26 half year results
HY26 half year results for six months ended 30 September 2025 21 November 2025
Slide 2: Good momentum in H1, well positioned for growth
Good momentum in H1, well positioned for growth Strong financial results, year-on-year increases across our key metrics Consistent successful delivery for our customers, underpinning future growth Strongly positioned with supportive market dynamics Confident outlook with FY26 expectations unchanged
Slide 3: Financial Review
Financial Review David Mellors CFO 3
Slide 4: Key messages
Key messages Good H1 revenue, profit, EPS growth and good cash conversion Strong margin progression to 7.9%, confidence in FY26 8% target Good FY26 revenue contract cover (c.90%) underpins confidence in FY expectations 4 Babcock International Group – Half year results for six months ended 30 Septemb
Slide 5: Financial highlights
Financial highlights +7% +90bps +19% revenue growth margin improvement profit growth £2.5bn 7.9% £201m +21% +25% EPS growth dividend growth 28.5p 2.5p 83% £141m £49m cash conversion free cash flow buyback in H1 5 Babcock International Group – Half year results for six months ended 30 September 2025
Slide 6: Organic revenue bridge
Organic revenue bridge (£m) Organic growth - at constant FX 6% 14% (10)% 26% 7% 123 ( 57 ) 41 2,539 45 2,409 ( 23 ) HY25 FX Marine Nuclear Land Aviation HY26 6 Babcock International Group – Half year results for six months ended 30 September 2025 © 2025 Babcock International Group - Not Subject to E
Slide 7: Underlying operating profit bridge
Underlying operating profit bridge 7.9% 7.2% margin margin 7.9% (£m) 9.1% margin +240bps margin +20bps +40bps 6.7% margin +160bps 7 201 14 (3) 7.0% margin 16 169 (1) HY25 FX Marine Nuclear Land Aviation HY26 7 Babcock International Group – Half year results for six months ended 30 September 2025 © 2
Slide 8: Delivering on margin guidance
Delivering on margin guidance Profit and margin medium term performance £450m 9% FY*/HY underlying operating profit 7.9% £400m Underlying operating margin 7.5% 8% Pillars of margin improvement 7.0% £350m 6.6% 7% 6.4% • Zero margin legacy contract fade 6.0% £300m 6% • Growth of quality business • Pro
Slide 9: Marine
Marine HY26 HY25 Contract backlog: Skynet additional services Contract backlog £2,820m £2,991m RMP West work packages Revenue traded on long-term contracts Revenue £823m £790m Underlying operating profit £55m £40m Revenue up 6% (at constant FX): Higher volumes in LGE – delivery of FY25 record orders
Slide 10: Nuclear
Nuclear HY26 HY25 Contract backlog: £114m Trafalgar Class defuel order Contract backlog £1,762m £2,461m Revenue traded on large multi-year contracts (FMSP, Victorious and MIP) Revenue £989m £866m Underlying operating profit £90m £76m Revenue up 14% (at constant FX): Cavendish strong growth (+25%) dr
Slide 11: Land
Land HY26 HY25 Contract backlog up 38%: £1bn DSG British Army support follow-on contract (March 2025) Contract backlog £3,321m £2,410m Revenue traded on long-term contracts Revenue £526m £591m Revenue down 10% (at constant FX): Underlying operating profit £42m £45m Lower volumes in civil businesses
Slide 12: Aviation
Aviation HY26 HY25 Contract backlog up 22%: Mentor 2 c.£300m recognised in FY25 Contract backlog £2,015m £1,655m Australia border force contract in H1 (A$250m) Revenue £201m £162m Revenue up 26% (at constant FX): Underlying operating profit £15m £8m Mentor 2 mobilisation and increased French militar
Slide 13: Free cash flow
Free cash flow £m HY26 HY25 Working capital: expected increase due to normal pattern of Underlying operating profit prepayments (licenses and VAT) and a small inventory increase 201 169 Right of use asset depreciation 25 19 Capex: continued investment in upgrade of infrastructure and systems – Other
Slide 14: Balance sheet strength and debt maturity
Balance sheet strength and debt maturity Net debt and gearing ratio Debt maturity profile £(1,750)m 3.0x £1.5bn £(1,609)m £(1,500)m 2.5x RCF 2030 £600m £(1,352)m £(1,250)m GBP bond 2026 £300m 2.0x £1.0bn £(1,000)m £(969)m Euro bond 2027 €550m 1.5x £(750)m 1.0x £.5bn £(500)m £(564)m £(435)m £(351)m 0
Slide 15: Disciplined capital allocation delivering growth & returns
Disciplined capital allocation delivering growth & returns Priorities 1 2 3 Organic investment Financial strength Ordinary dividend Investment to support business Maintain strong balance sheet Pay an ordinary dividend operations and enhance growth potential and investment grade rating Strategic grow
Slide 16: Summary
Summary Good H1 revenue, profit, EPS growth and good cash conversion Strong margin progression to 7.9%, confidence in FY26 8% target Good FY26 revenue contract cover (c.90%) underpins confidence in FY expectations 16 Babcock International Group – Half year results for six months ended 30 September 2
Slide 17: Business review
Business review David Lockwood CEO
Slide 18: Consistent delivery enabling growth and margin expansion
Consistent delivery enabling growth and margin expansion DSG Growth Growth into adjacent Opportunities • GLV for UK Land Rover • Contract signed in 2015 Improved and consistent • Frontline support model replacement • Solved early delivery problems delivery enabled a £1bn • Ukraine vehicle support •
Slide 19: Consistent delivery enabling growth and margin expansion
Consistent delivery enabling growth and margin expansion Advanced manufacturing Growth Growth into adjacent Opportunities • UK and international • 10 year investment into capability • Automation driving • Type 31 advanced ship- submarine and naval continuous production build techniques • Evolved pre
Slide 20: Structural growth drivers
Structural growth drivers Significant increase in market opportunity Global insecurity Rising global threats Rapidly evolving technology Global defence UK defence Civil nuclear • Enduring conflicts and increased threat environment • Nuclear resurgence • NATO defence and security spending targets inc
Slide 21: Babcock at the heart of UK defence
Babcock at the heart of UK defence Already delivering against each pillar of the new Defence Industrial Strategy A resilient Backing Defence Engine for Increasing Transforming industrial base British innovation growth exports procurement • Investing in skills and • Extensive domestic • Investment in
Slide 22: Positive nuclear developments
Positive nuclear developments CIVIL NUCLEAR DEFENCE NUCLEAR Large GW reactors SMRs and AMRs UK International GBE-N X-energy Sizewell C Availability and resilience AUKUS: US support Market procurement to deploy funded of all submarine fleets Australia commitment programme AMRs Hinkley Point C Fuel de
Slide 23: Significant long-term growth opportunities
Significant long-term growth opportunities International Advanced FMSP UK defence AUKUS follow-on shipbuilding manufacturing vehicles • Five major build programmes • UK and European SMR • US support, Australian • Multi year follow-on • UK joined the Common opportunities of 20+ ships, worth build opp
Slide 24: Summary
Summary Strong financial results, year-on-year increases across our key metrics Consistent successful delivery for our customers, underpinning future growth Strongly positioned with supportive market dynamics Confident outlook with FY26 expectations unchanged Babcock International Group – Half year
Slide 25: Appendix
Appendix ° ® Babcock
Slide 26: HY26 results split by sector
HY26 results split by sector Revenue Underlying operating profit Contract backlog 8% 7% 20% 27% 29% 32% 21% 21% £2.5bn £201m £9.9bn 33% 18% 39% 45% Marine Nuclear Land Aviation 26 Babcock International Group – Half year results for six months ended 30 September 2025 © 2025 Babcock International Grou
Slide 27: HY26 Group splits
HY26 Group splits Defence revenue Geographical revenue Contract backlog 16% 8% 15% 3% 4% 7% 9% 9% £2.5bn 8% £2.5bn £9.9bn 59% 61% 14% 17% 70% Defence UK UK Aus & NZ Defence UK Defence International South Africa Canada Defence International Civil UK France ROW Civil UK Civil International Civil Inter
Slide 28: Underlying financial results overview
Underlying financial results overview HY26 HY25 Backlog up 4% driven by Land and Aviation Backlog £9,918m £9,517m Organic revenue growth 7% (at constant FX) Revenue £2,539m £2,409m • Growth driven by Nuclear, Aviation and Marine Underlying operating profit £201m £169m Underlying operating profit up
Slide 29: Statutory to underlying reconciliation
Statutory to underlying reconciliation HY26 HY25 (£m) Specific Specific Underlying Adjusting Statutory Underlying Adjusting Statutory Items Items Revenue 2,538.6 - 2,538.6 2,408.9 - 2,408.9 Operating profit / (loss) 201.1 33.2 234.3 168.8 15.0 183.8 Operating margin 7.9% 9.2% 7.0% 7.6% Share of resu
Slide 30: Net debt / EBITDA (covenant basis)
Net debt / EBITDA (covenant basis) HY26 HY25 (£m) (Rolling 12 months) (Rolling 12 months) Underlying operating profit 395.3 252.2 Depreciation and amortisation 82.8 71.9 Other covenant adjustments 0.6 (1.3) EBITDA 478.7 322.8 JV and associate dividends 7.6 12.1 EBITDA + JV and associate dividends 48
Slide 31: Balance sheet strength – progress on pension derisking
Balance sheet strength – progress on pension derisking Technical pension deficit £(700)m c.£600m Technical provision deficit – actuarial deficit (aggregated)* • Around £95m aggregated technical provision deficit (FY25: £125m) £(600)m reduction Funding agreements £(500)m • Long-term funding agreement
Slide 32: Medium-term guidance set out in June 2025
Medium-term guidance set out in June 2025 FY25 medium-term guidance Organic revenue MID-SINGLE-DIGIT growth average annual growth 8% FY26 Prior 8% M-T target expected to be reached one year early Operating margin ≥9% medium term ≥9% upgraded medium-term target Operating cash ≥80% conversion average
Slide 33: FY sector detail – organic, ongoing businesses
FY sector detail – organic, ongoing businesses Underlying operating Revenue Underlying margin Contract backlog profit (£m) FY25 FY24 FY23 FY22 FY21 FY25 FY24 FY23 FY22 FY21 FY25 FY24 FY23 FY22 FY21 FY25 FY24 FY23 FY22 FY21 Marine1 1,576 1,495 1,482 1,209 1,277 96.5 103.1 112.8 90.3 82.2 6.1% 6.9% 7.
Slide 34: FY sector detail - reported
FY sector detail - reported Revenue Underlying operating profit Underlying margin Contract backlog (£m) FY25 FY24 FY23 FY22 FY25 FY24 FY23 FY22 FY25 FY24 FY23 FY22 FY25 FY24 FY23 FY22 Marine 1,576 1,429 1,440 1,259 96.5 13.1 12.7 98.0 6.1% 0.9% 0.9% 7.8% 3,027 2,993 2,581 2,492 Nuclear 1,816 1,521 1
Slide 35: HY sector detail - reported
HY sector detail - reported Revenue Underlying operating profit Underlying margin Contract backlog (£m) HY26 HY25 HY24 HY23 HY26 HY25 HY24 HY23 HY26 HY25 HY24 HY23 HY26 HY25 HY24 HY23 Marine 823 790 750 666 55.3 40.0 63.0 47.3 6.7% 5.1% 8.4% 7.1% 2,820 2,991 2,929 2,426 Nuclear 989 866 711 558 89.7
Slide 36: Marine – key contracts
Marine – key contracts Contract Customer Start End Country Notes Type 31 + Capability Insertion UK MOD 2019 2028 UK Design, build and assembly of five general purpose frigates for the Royal Navy Programme Future Maritime Support Programme UK MOD 2021 2026 UK Through-life ship engineering management
Slide 37: Nuclear – key contracts
Nuclear – key contracts Contract Customer Start End Country Notes Future Maritime Support UK MOD 2021 2026 UK Nuclear submarine, infrastructure and license site elements of FMSP for the Royal Navy Programme (FMSP) Major Infrastructure Project delivery for the upgrade works to Devonport Dockyard’s 9,
Slide 38: Land – key contracts
Land – key contracts Contract Customer Start End Country Notes JP9101 – Enhanced Defence High Frequency ADF 2023 2033 Australia Operation, support and technology upgrade programme for the Australian Defence Force Communications Maintenance, repair and overhaul to over 35,000 vehicles of the British
Slide 39: Aviation – key contracts
Aviation – key contracts Contract Customer Start End Country Notes Aircraft, training support and maintenance to the French Air Force contract includes five Mentor 1 French DOD 2021 2027 France one-year options for extension Aircraft, training support and maintenance to the French Air Force, Space F
Slide 40: Disclaimer
Disclaimer This document has been prepared by Babcock International Group PLC By their nature, forward-looking statements involve known and unknown (the “Company”) solely for use at a presentation in connection with the risks, uncertainties and other factors, many of which are beyond Company’s resul
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