Babcock profits fall as Covid hits civil aerospace
Engineering contractor Babcock said the civil aviation market continued to struggle in its third quarter as the sector was hit by a resurgent Covid-19.
It comes as the firm reported underlying revenue for the nine months to December 31 was £3.40 billion, down 4.9 per cent from £3.57 billion a year earlier.
Underlying operating profit for the nine months was down 37 per cent annually to £202 million from £320 million.
In a worrying trading update on a "review of contract profitability and balance sheet", the aerospace and defence firm cautioned on possible write-downs.
Babcock has a strong presence in the region, including the Defence Support Group operation at MoD Donnington, in Telford, and the former Macneillie specialist vehicle conversions business at Aldridge, now renamed Babcock Vehicle Engineering.
"Trading in the third quarter saw a continuation of trends in the first half of the year, with weakness in our civil aviation businesses and a negative impact from Covid-19," Babcock said.
"Uncertainty remains around the outturn for this financial year, especially given that our fourth quarter is historically our strongest and that the Covid-19 situation has worsened in most of our markets. Given this uncertainty, and the start of our review of contract profitability and balance sheet, we continue not to provide financial guidance for this financial year."
Babcock added that its contract profitability and balance sheet probe, conducted alongside an "independent accountancy firm", will be reviewed by its board and auditor PricewaterhouseCoopers before its publishes its annual results in May.
"We have recently started a detailed review of our balance sheet and contract profitability. Early indications suggest that there may be negative impacts on the balance sheet and/or income statement for current and/or future years," the company warned.
