Increased spending on defence is food news for companies associated with the sector, including Babcock, which has a major presence n the West Midlands including the Defence Support Group operation at MoD Donnington, in Telford.
The company has reported higher profits and raised its financial outlook. It generated an operating profit of 拢364 million in the year to the end of March, 51 per cent higher than the previous year.
Revenues grew by 11 per cent to 拢4.8 billion, with particularly strong growth in the nuclear and marine sectors.
It also said it was now expecting to meet its target underlying operating margin in the next financial year – one year earlier than it previously thought.
Babcock provides engineering support across the marine, nuclear, land and aviation sectors and also maintains the UK’s fleet of submarines.
It recently announced that 400 jobs had been secured in Telford after a 拢1.6 billion defence contract was extended for five years.
The Ministry of Defence contract extension will see Donnington-based Babcock International continue to provide maintenance and parts support to British Army assets, including Challenger 2 tanks and Trojan armoured vehicles.
The government says the deal directly supports a further 1,200 defence jobs across the country, as well as 6,000 UK businesses in the wider supply chain.
鈥淚n a period of increased global instability, more is being expected of our armed forces,” said Babcock鈥檚 Chief Executive Officer, David Lockwood This contract extension ensures that Babcock continues to provide the British Army with the tools to do its job, when and wherever they are needed. Our know-how, application of technology and extensive experience in the land domain help ensure that the British Army is ready to fight and win wars.鈥
鈥疷K defence spending made up nearly two-thirds of Babcock’s sales last year, but it also operates in countries including Australia , Canada, France , and Ukraine .
The company told investors that rising global threats and ongoing insecurity had contributed to governments across all its markets strengthening their stance on defence and security.
This was set to drive significant spending and investment, particularly in the civil nuclear sector for the foreseeable future.
It also highlighted the UK Government’s renewed commitment to defence spending, with the Prime Minister earlier this month committing to spend five per cent of gross domestic product (GDP) on national security.
On Wednesday, it was announced that the UK is set to buy a fleet of new fighter jets capable of carrying nuclear weapons, with Sir Keir Starmer saying the country can “no longer take peace for granted”.
“This is a new era for defence,” Mr Lockwood said.
“There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth.”
Babcock also announced the launch of a 拢200 million share buyback programme, which will take place over the course of the 2026 financial year. Defence Secretary John Healey MP has spoken of the importance of the operation of Babcock in Telford and its role in maintaining equipment for the British army.
Speaking in March, he said: 鈥淭anks, armoured vehicles and kit are the backbone of the British Army.鈥疻e are taking action to ensure the outstanding service men and women of our Armed Forces are properly equipped and ready to respond to ever-changing global threats.鈥疭upported by largest sustained increase in defence spending since the Cold War, this substantial investment with Babcock demonstrates how defence is an engine for growth: supporting businesses of all sizes and sustaining more than 400 good, well-paid jobs in the West Midlands.鈥