Babcock International PLC (LSE:BAB) shares fell 3.7% to 1,007p as the defence contractor reported a decline in profits, though it was in line with guidance given a month ago.
The FTSE 100 group's expectations for the 2027 financial year were also unchanged, with around 70% of forecast revenue already under contract at the start of April.
The results largely confirmed figures disclosed in May alongside a previously announced £140.0 million charge on the Type 31 frigate programme.
Excluding that charge, revenue rose 10% at constant exchange rates to £5.3 billion in the year to 31 March, driven by growth in its Nuclear and Aviation divisions. Underlying operating profit fell 19% to £433.3 million, while the operating margin improved to 8.2% from 7.5%, exceeding the company's 8.0% target.
Net debt excluding leases fell to £22.7 million from £101.2 million, leaving leverage at 0.2 times EBITDA.
Chief executive David Lockwood said the company had delivered "continued strategic and operational progress" despite an increasingly uncertain geopolitical backdrop.
Analyst Christopher Bamberry at Peel Hunt said the results were in line with the detailed guidance provided on 13 May and highlighted strong performances in Nuclear and Aviation.
He said Babcock's unchanged outlook was supported by good revenue visibility and reiterated forecasts for 2027 pre-tax profit of £428.3 million and earnings per share of 63.7p.
Peel Hunt maintained its 'buy' recommendation and 1,409p target price, arguing the shares continued to trade at a roughly 25% discount to a basket of defence and civil engineering peers despite the potential for mid- to high-teens earnings growth over the medium term.
