Engineering and services giant Babcock yesterday said work on a second massive aircraft carrier project was already “well under way” in Fife, as it revealed strong results for the year to March.
The firm said the construction of a second warship HMS Prince of Wales was ongoing at sites across Britain including its yards at Rosyth, and Appledore in Devon.
Meanwhile, it said work to complete the first of the two would reach its next “significant milestone” when the dry dock housing HMS Queen Elizabeth is flooded later this summer.
Fitting out with electrical and mechanical systems is under way, with the vessel due to be formally launched by the Queen at a ceremony on July 5.
Underlying revenues climbed 9% to £3.55 billion, with profits rising 15% to £316.1 million.
On a statutory basis, which strips out Babcock’s share of joint ventures and associated revenues, sales rose 10% to £3.32bn and pre-tax returns jumped by a fifth to £219m.
The growth, branded “strong” by chief executive Peter Rogers, resulted in a 13% hike in the full-year dividend to 21.4p per share.
Babcock’s order book declined by £500m to £11.5bn at the year-end, while net debt rose by almost £35m to £533.7m.
“Babcock maintained its record of delivering strong revenue and profit growth, with all our divisions making progress, building on our leading position in engineering support services,” said Mr Rogers.
“We produced a top-class financial performance, driving strong cash flow and cash conversion, delivering another year of growth in shareholder value.
“Our markets remain buoyant and we enter the new financial year with a powerful platform for further growth in the UK and overseas.
“Building on the strong growth in revenue and earnings delivered in the 2013/14 financial year, the board is confident the group will continue to make further strong progress in the 2014/15 financial year.”
Babcock, which employs more than 1,700 people in Fife, said the UK remained a positive market, with long-term contracts in place to support major Ministry of Defence programmes creating “significant opportunities”. MoD planning forecasts naval expenditure of around £17.4bn over the next decade.
The firm also identified the UK submarine market as having considerable potential for growth, with investment of £35.8bn expected over the coming 10 years.
It expects to boost its presence on the Clyde as the MoD plans to turn the naval base there into the UK’s main operating base for all classes of submarine.
Its marine and technology division is also working on a refit of HMS Ocean, and targeting opportunities in oil and gas and renewables markets, while the company’s defence and security arm anticipates benefiting from a continued drive for outsourcing of support and facilities management functions.
Babcock also hailed the performance of subsidiary Cavendish Nuclear, which is leading decommissioning operations at Dounreay, and continued to “strengthen its position as the UK’s leading supplier to the nuclear industry”.
But its construction, energy and mining operations saw a flat year, given a worsening in the South African economy and weakness in the rand which has caused consumer spending headwinds.
Meanwhile, the group hailed its £920m acquisition of search and rescue helicopter firm Avensis, which came after the year-end.
Better known as offshore oil and gas transport firm Bond, Avensis came with £705m of debt and potential damages claims related to November’s Glasgow helicopter crash, when a Police Scotland helicopter crashed into the Clutha pub killing 10 people.