Babcock on track to hit targets after strong start to year

Defence engineering group Babcock has said that it is trading in line with expectations, as it meets with institutional investors and analysts for a capital markets day.

Interim results released in November indicated "a strong start to the year", Babcock said, and the outlook currently remains the same.

"The board's expectations for another year of organic revenue growth, underlying operating margin expansion and positive cash flow generation are unchanged, and we continue to build momentum to achieve the medium-term guidance," the company said in a brief trading statement on Wednesday.

Babcock had said at the time of its last annual report in July that it expects to reinstate a dividend in the current financial year.

Through its medium-term guidance, covering the next three-to-five years, the company is guiding to an underlying operating margin of at least 8%, up from 6.3% in the most recent financial year, as well as average annual revenue growth in the mid-single digits and underlying operating cash conversion of at least 80%.

Babcock shares were down 0.3% at 464.4p by 0835 GMT.