Babcock boss hails new era for defence: Footsie giant's shares surge to 10-year high

Daily Mail​

10 hours ago

Babcock shares yesterday surged to their highest level in a decade as the military contractor hailed a 'new era for defence' and bumped up its profit outlook.
Chief executive David Lockwood said governments were sweeping aside concerns about costs as they seek to ramp up defence capability as quickly as possible amid growing threats.
He told the Mail: 'When the very values that we cherish
are under threat, then you're driven by capability, you're driven by time, you're driven by other things.'
It came as world leaders gathered in The Hague, Netherlands, for a Nato summit amid escalating global tensions, including war in Ukraine and conflict in the Middle East.
Europe is ramping up defence spending under pressure from US President Donald Trump.
The Government this week warned that Britain should 'actively prepare for the possibility of the UK homeland coming under direct threat, potentially in a wartime scenario,' and Prime Minister Sir Keir Starmer said Britain will buy 12 F-35A fighter planes with nuclear capabilities.
Lockwood said governments were now asking companies: 'Can you go faster?', not 'Can you be cheaper?'
He said: 'Those are not questions you would have been asked five years ago. It would have been, 'What's your best price?''
Investors have started to shift from an anti-defence stance, he said, adding: 'I've never
understood how you could exclude defence stocks from environmental, social and governance funds.
'We defend societal values, we're one of the most governed industries in the world, we defend countries that take the environment more seriously than our adversaries.
'There's a whole bunch of things that a generation have taken for granted and they've suddenly realised they can't.'
The UK has pledged to increase defence spending to 5 per cent of GDP by 2035.
Lockwood said: 'The commitments in this Parliament and where the money comes from are clear... it involves governments making difficult choices, whoever is in charge.'
Shares in Babcock, which is best known for maintaining Britain's nuclear submarines, rose 14pc to their highest in a decade before closing 10.8 per cent, or 111p, up at 1144p.
The company said profit before tax jumped 51 per cent from £216.7million to £329.1million in the 12 months to the end of March. Sales were up 10 per cent from £4.3billion to £4.8billion.
In its first share buyback in 134 years, it will return £200million to investors.
And it hiked its medium-term operating margin forecast, which is a measure of profitability, from 8 per cent to 9 per cent as it reaps rewards from a rise in military spending.
The FTSE 100 firm said it has a contract backlog of £10.4billion.