Engineering group Babcock International hailed the £1.75 billion takeover of helicopter services firm Avincis as it revealed a strong first-half profits performance.
Shares in the group surged 5.9% to 1,184p in trading yesterday after investors were impressed by a 29% leap in statutory pre-tax profits to £137 million in the six months to September 30.
Revenues also climbed strongly from £1.58bn in the comparable period in 2013 to £1.94bn this year.
Babcock said its total group order book and bid pipeline has also grown since the firm’s interim statement in July up by around £5bn to £18.5bn and is significantly ahead of the £12bn figure from a year earlier.
The firm said the spike reflected new contract wins and renewals including the Magnox nuclear decommissiong project, a 25-year emergency services fleet management award, and rail electrification and track renewal works.
However, defence-related contracts remain a principal workstream for Babcock, and the firm’s Marine & Technology division involved in the Aircraft Carrier Alliance tasked with building the Queen Elizabeth class carriers which are being built in Fife saw operating profits increase 12% in the half year to £77.7m.
The first of the carriers, HMS Queen Elizabeth, was floated out of its dock and into the basin at Babcock’s dockyard facility at Rosyth where more than 1,000 staff are employed in July.
“Activities are now focused on the fitting out of the vessel and installation of vital electrical and mechanical systems,” the firm said in its update yesterday.
“Work is now progressing on the assembly of the second QE carrier, HMS Prince of Wales.”
The firm’s Defence & Security division posted a 6% rise in operating profit to £58.5m in the half year.
Meanwhile Support Services was 4% ahead at £40.7m.
However, it was the acquisition of Avincis, in a complex £1.75bn cash and debt deal in May, that CEO Peter Rogers picked out as the highlight of the period.
The firm is a major provider of helicopters and fixed-wing aircraft and a significant player in the North Sea sector through north-east based Bond Offshore, which provides transportation services to the oil and gas industry.
“In the first half, Babcock further strengthened its position as Britain’s leading engineering services group while strengthening its international position with the acquisition of Avincis,” Mr Rogers said.
“We achieved strong organic growth in both revenue and profit, with all our existing core businesses continuing to move forward.
“Avincis made an excellent start under our ownership and has fulfilled our expectations at the time of acquisition.
“Our markets remain buoyant and our increased dividend reflects the board’s confidence that we will continue to make strong progress this year and deliver results in line with our expectations.”