Babcock International has reported a 19% rise in underlying profit, excluding a £140 million hit caused by design changes to its warship building programme.
Revenue grew 8% at constant currency, with particularly strong growth in Nuclear and Aviation. Underlying operating profit decreased to £293 million (FY25: £363 million) due to the Type 31 charge, reported earlier this year. The contract, placed with the Rosyth yard, represents less than 4% of group revenue.
Excluding this charge, underlying operating profit rose 19% to £433.3 million, with an improved underlying operating margin of 8.2%.
Also at Rosyth, the advanced manufacturing of missile tubes for the UK-US Common Missile Compartment has achieved record levels of output, delivering 12 missile tube assemblies over the year for the US Columbia Class and UK Dreadnought submarine programmes.
Following Rosyth’s success as a centre of excellence for advanced manufacturing of complex nuclear submarine components, Babcock has further expanded its strategic partnership with HII, with an initial contract to support the US Virginia Class submarine build programme.
The company said major infrastructure and development work is required at HMNB Clyde, the MOD operational submarine base where we manage and deliver all in-service support and base maintenance periods for all UK nuclear submarines.
The UK Government has announced the Clyde 2070 programme, a multi-decade, multi-billion programme representing one of the most significant UK Government investments over the coming decades.
The board has recommended a 15% increase in the full-year dividend to 7.5 pence per share and completed a £200 million share buyback, announcing a further £200 million programme. The contract backlog stood at £9.8 billion.
On the frigate setback, it said operational progress continued, including the float-off of ships one and two, keel laying for ship three, and steel cut for ship four.
“As announced in our trading update on 13 May 2026, we recognised a £140 million charge at the year-end following higher-than-expected rework during the outfitting of ship one and an updated estimate of the cost to complete the programme.
“The full charge is recognised in FY26 operating profit, with related cash costs expected over the remainder of the contract.
“Importantly, through the Type 31 programme, we are establishing a leading naval shipbuilding capability with a flexible build and support model which is already having success in export markets, including Indonesia and Poland.
“While we were disappointed not to be selected for the Swedish corvette opportunity, we remain well positioned for further multi-billion-pound naval programmes, as allied governments expand and upgrade their fleets.”
The company said energy security is also driving renewed government commitment to nuclear power. Global expenditure on new nuclear is expected to reach $2.2 trillion by 2050, with growing interest in Small Modular Reactors and advanced modular reactors (AMRs). In the UK, the Government has already allocated £2.5 billion to support early SMR deployment.
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