Babcock International Group Plc · LSE:BAB
Babcock International — Investor Presentation (December 2024)
17 slides from Babcock International's investor presentation, December 2024
Slide 1: Babcock Investor Relations presentation December 2024
Babcock Investor Relations presentation December 2024
Slide 2: Key investment points
Key investment points Improving margins Strongly positioned Sustainable growth and cash flow › Around 74% defence revenue › £9.5bn contract backlog › Contract terms and discipline › Critical supplier to governments › Supportive markets: military › Enhanced operational, programme capability vs fiscal
Slide 3: Who we are
Who we are FY24 Revenue Babcock is an international defence, aerospace and security company providing support and product solutions to enhance our customers’ defence £4.4bn capabilities and critical assets HY25 Backlog With a portfolio focused With a clear strategy for Our 26,000+ employees growth,
Slide 4: Delivering sustainable growth
Delivering sustainable growth Market Capabilities aligned What we deliver dynamics with customers’ needs Defence budget growth in focus countries Through-life support Greater demand for Availability asset availability Why we grow Requirement for Product and greater value-add development Equipment mo
Slide 5: We deliver through four sectors
We deliver through four sectors Military training Military support Marine Nuclear Air operations Submarine Build support Training Aviation Nuclear Major Land infrastructure Asset support Aviation Land Marine Civil LGE Mission Naval systems support Naval engineering 5 Babcock International Group – In
Slide 6: Financial highlights
Financial highlights Revenue Underlying operating profit Free cash flow 7.0% £350 7.0% £160m 6.6% £300 6.4% 6.5% £311m £4,456m £4,048m £75m £250 6.0% £265m £3,469m £200 5.5% £221m £150 5.0% £100 4.5% £(191)m £50 4.0% £0 3.5% FY22 FY23 FY24 FY22 FY23 FY24 FY22 FY23 FY24 Strong revenue growth Solid pr
Slide 7: Strengthened balance sheet
Strengthened balance sheet £m (1,600) Net debt reduced by c.£1.2bn (1,400) › Gearing reduced from 2.8x (HY22) to 0.6x (HY24) › Target range of 1.0x to 2.0x EBITDA (1,200) › S&P credit rating upgraded to BBB+ (Dec 2023) › Ample liquidity, in excess of £1bn (1,000) (800) Pension deficit reduced by c.£
Slide 8: FY24: strong foundations and continuing momentum
FY24: strong foundations and continuing momentum Revenue 1 Operating profit 2 Margin 2 Backlog 3 + 30% + 61% + 100bp + £4bn to £4.4bn to £311m to 7.0% to £10.3bn Track record of delivery over three years Credit rating Net debt 4 Defence revenue Dividend Upgraded 2x down c.£1bn +18ppt to 74% reinstat
Slide 9: Our growth strategy
Our growth strategy UK International Optimise Selective new Expansion in Direct Strategic position programmes focus countries exports partnerships › Long-term UK submarine › Army Collective Training › Canadian future › Advanced corvette › Jackal high mobility support › UK aircraft autonomy submarine
Slide 10: What this delivers
What this delivers Medium term guidance Organic growth Margin Cash conversion Mid-single digit ≥ 8% ≥ 80% 10 Babcock International Group – Investor Relations presentation - December 2024 © 2024 Babcock International Group - Not Subject to Export Control
Slide 11: Capital allocation framework
Capital allocation framework Priority 1 Organic investment Sustain investment to support business operations and enhance growth potential 2 Financial strength Maintain strong balance sheet and investment grade rating 3 Ordinary dividend Pay an ordinary dividend Further capital options Shareholder re
Slide 12: Summary: confidence in driving value
Summary: confidence in driving value Disciplined capital allocation Clear financial targets Strong foundation 12 Babcock International Group – Investor Relations presentation - December 2024 © 2024 Babcock International Group - Not Subject to Export Control
Slide 13: Babcock
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Slide 14: Delivering at every stage of the asset life-cycle
Delivering at every stage of the asset life-cycle Operational asset Engineering Customer Product development knowledge know-how intimacy capability Operational capability Asset / service lifetime (c.20 – 30 years) Extended life Typical asset support cycle Capability requirement increase due to defen
Slide 15: Robust contract risk management framework
Robust contract risk management framework Contract Risk Phasing PRE-CONTRACT SIGNATURE MOBILISATION DELIVERY Internally Funded Projects Capture Purpose Delivery Handover Define Execute Tracking Pursuing Capturing Bidding Closing Initiation and Close Customer Funded Projects DELIVERY / Pre-contract s
Slide 16: UK submarine fleet transition underpins Nuclear growth
UK submarine fleet transition underpins Nuclear growth Deep Maintenance UK submarine long-term in-service and disposal Programmes 2020 2050 2080 Vanguard Class Dreadnought Class Deterrent Future Continuous Submarines at Sea Deterrent Astute Class SSN-AUKUS Future attack (platform numbers TBD) submar
Slide 17: Medium term guidance – margin improvement levers
Medium term guidance – margin improvement levers Low margin legacy contract ‘fade’ Overhead rationalisation Systems upgrades Process Medium term guidance optimisation/ simplification Productivity gains Margin ≥ 8% Growth of quality business Margin today Medium term 17 Babcock International Group – I
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