Babcock International PLC (LSE:BAB) kept its full-year guidance unchanged on Friday, saying it still expects to deliver an underlying operating margin of 8% this year and is on track for its medium-term goals of mid-single digit revenue growth and margins of at least 9%.
The reassurance came after a strong first half to 30 September 2025. Revenue rose 7% on an organic basis to £2.54 billion, with Nuclear the standout performer.
Underlying operating profit increased 19% to £201.1 million, lifting the underlying margin from 7.0% to 7.9%, with every division contributing.
“Good momentum was underpinned by consistent delivery for our customers against a background of supportive market dynamics,” said chief executive David Lockwood, adding that the group is “pursuing exciting opportunities for sustainable growth and margin expansion”.
Cash generation was robust. Underlying free cash flow jumped to £140.6 million from £94.7 million, helped by an 83% cash conversion rate and lower pension deficit payments.
Net debt excluding leases fell to £55.8 million, giving very low gearing at 0.2 times EBITDA, a comfort point for investors in a project-heavy business.
The interim dividend has been raised 25% to 2.5p a share, and Babcock has so far completed £49 million of its £200 million share buyback, which it still expects to finish by year-end.