Babcock International PLC (LSE:BAB) set an optimistic tone for its interim results at the end of the last financial quarter, indicating its underlying operating profit could be in for an increase.
It is due to report interim financial results on 14 November, following the recent expansion of its business in the marine industry.
This week, Babcock said it had signed a £750 million infrastructure contract to deliver submarine capability for the UK Ministry of Defence at Devonport in Plymouth.
Analysts said that, following year-on-year increases to Babcock's earnings, higher cash flow and operational improvements, their estimates for the full year 2024 were "unchanged", weighted towards the first half.
“Trading for the first five months of FY24 was encouraging, with good organic revenue growth and improved operational performance," Peel Hunt analysts said in a research note.
"Overall, including the impact of contract phasing in Marine and further growth in Nuclear infrastructure programmes, organic revenue growth offset the impact of disposals in FY23."
In a statement in September, the company hinted at “further underlying margin expansion” in its financial outlook for the year ahead.
On the day of its annual general meeting that month, Babcock said its full-year expectations remained unchanged.
It reported “good organic revenue growth” since the start of the financial year, improved operational performance and high cash flows in the trading update.
In particular, it said its business would benefit from the impact of contract phasing in the marine industry and growth in nuclear infrastructure programmes.
Its underlying profit since the start of the year has also been bolstered by initial licence fees associated with the Polish MIECZNIK frigate programme, the company said in September.