nomorehelosforme
16th Nov 2018, 20:48
Babcock braces for £100m hit on North Sea helicopter arm (https://news.sky.com/story/babcock-braces-for-100m-hit-on-north-sea-helicopter-arm-11555982)
The FTSE-250 support services group will disclose the writedown in its half-year results next week, Sky News learns.
18:06, UK,Friday 16 November 2018
https://e3.365dm.com/18/10/1096x616/skynews-babcock-gosport_4461093.jpg?20181022165755Image:Babcock will be taking a £100m hit on the value of its helicopter business
By Mark Kleinman, City editor
Babcock International Group, the engineering giant which maintains Britain's nuclear submarine fleet, will next week try to draw a line under its recent difficulties by taking a £100m hit on the value of its helicopter business.
Sky News has learnt that Babcock is likely to announce as part of its half-year results next Wednesday an impairment charge relating to the Avincis operations it bought in 2014 for £1.6bn.
The precise size of the writedown, which will affect the company's profitability but will be predominantly a non-cash item, is expected to be decided at a board meeting early next week.
One investor said the charge relating to Avincis was likely to be in the region of £100m, with analysts forecasting a number of relatively minor costs deriving from issues including the closure of the company's Appledore shipyard in Devon, which was confirmed earlier this month.
City sources said that Babcock had decided to take the financial hit as it seeks to repair relations with the City following the publication of a bearish research note by a firm calling itself Boatman Capital.
The Boatman note contained a series of allegations about Babcock's management and finances, provoking a stinging response from the company, which said much of the content was "false and malicious".
A number of mainstream City analysts, including at Royal Bank of Canada, have also cast doubt on Babcock's prospects in recent weeks, with its shares under pressure after sliding by nearly 25% over the last year.
Babcock, which is structured under four main operating divisions, is the Ministry of Defence's (MoD) second-largest supplier, and runs a string of major contracts for all of the UK's armed forces.
The company employs tens of thousands of people in Britain and has a market value of roughly £3bn.
Its engineering expertise is seen as a vital asset in Whitehall, particularly because of the company's role in maintaining the Vanguard class of nuclear submarines.
The Financial Times reported this week that the MoD was seeking assurances that Babcock can complete a £200m overhaul of HMS Vanguard on time.
The purchase of Avincis was funded partly through a rights issue, but its performance was subsequently affected by an oil price slump which left much of its fleet under-utilised by a North Sea oil industry grappling with a steep decline in revenues.
However, the majority of the Avincis operations, which are generated from high-margin emergency medical and firefighting activities, have turned out to be a compelling growth business for Babcock.
The FTSE-250 company retains the confidence of its key public sector customers, and included a statement from a Government spokesman in a stock exchange announcement this week which said it remained "committed to working with [Babcock] on a wide range of programmes".
The MoD spent more than £1.7bn with the company last year - a sizeable chunk of Babcock's overall revenues.
Recent pressure on its shares have led some analysts to question whether Mike Turner, the chairman since 2008, may step down in the near term, but he said this week that he had no intention of doing so.
One shareholder said on Friday that Mr Turner, the former boss of BAE Systems, enjoyed widespread investor support despite their shared frustration at its stock price performance.
Babcock has sought to differentiate itself from peers in the support services sector by highlighting the skilled nature of its workforce and the loftier profit margins that it enjoys.
The FTSE-250 support services group will disclose the writedown in its half-year results next week, Sky News learns.
18:06, UK,Friday 16 November 2018
https://e3.365dm.com/18/10/1096x616/skynews-babcock-gosport_4461093.jpg?20181022165755Image:Babcock will be taking a £100m hit on the value of its helicopter business
By Mark Kleinman, City editor
Babcock International Group, the engineering giant which maintains Britain's nuclear submarine fleet, will next week try to draw a line under its recent difficulties by taking a £100m hit on the value of its helicopter business.
Sky News has learnt that Babcock is likely to announce as part of its half-year results next Wednesday an impairment charge relating to the Avincis operations it bought in 2014 for £1.6bn.
The precise size of the writedown, which will affect the company's profitability but will be predominantly a non-cash item, is expected to be decided at a board meeting early next week.
One investor said the charge relating to Avincis was likely to be in the region of £100m, with analysts forecasting a number of relatively minor costs deriving from issues including the closure of the company's Appledore shipyard in Devon, which was confirmed earlier this month.
City sources said that Babcock had decided to take the financial hit as it seeks to repair relations with the City following the publication of a bearish research note by a firm calling itself Boatman Capital.
The Boatman note contained a series of allegations about Babcock's management and finances, provoking a stinging response from the company, which said much of the content was "false and malicious".
A number of mainstream City analysts, including at Royal Bank of Canada, have also cast doubt on Babcock's prospects in recent weeks, with its shares under pressure after sliding by nearly 25% over the last year.
Babcock, which is structured under four main operating divisions, is the Ministry of Defence's (MoD) second-largest supplier, and runs a string of major contracts for all of the UK's armed forces.
The company employs tens of thousands of people in Britain and has a market value of roughly £3bn.
Its engineering expertise is seen as a vital asset in Whitehall, particularly because of the company's role in maintaining the Vanguard class of nuclear submarines.
The Financial Times reported this week that the MoD was seeking assurances that Babcock can complete a £200m overhaul of HMS Vanguard on time.
The purchase of Avincis was funded partly through a rights issue, but its performance was subsequently affected by an oil price slump which left much of its fleet under-utilised by a North Sea oil industry grappling with a steep decline in revenues.
However, the majority of the Avincis operations, which are generated from high-margin emergency medical and firefighting activities, have turned out to be a compelling growth business for Babcock.
The FTSE-250 company retains the confidence of its key public sector customers, and included a statement from a Government spokesman in a stock exchange announcement this week which said it remained "committed to working with [Babcock] on a wide range of programmes".
The MoD spent more than £1.7bn with the company last year - a sizeable chunk of Babcock's overall revenues.
Recent pressure on its shares have led some analysts to question whether Mike Turner, the chairman since 2008, may step down in the near term, but he said this week that he had no intention of doing so.
One shareholder said on Friday that Mr Turner, the former boss of BAE Systems, enjoyed widespread investor support despite their shared frustration at its stock price performance.
Babcock has sought to differentiate itself from peers in the support services sector by highlighting the skilled nature of its workforce and the loftier profit margins that it enjoys.