Babcock International Group PLC on Friday said it is making progress towards its medium-term ambitions as the global push towards rearmament boosts profit in financial 2024.

The London-based company is a provider of technical and engineering support services to customers in the defence and civil sectors.

In the year that ended March 31, Babcock said pretax profit increased to £216.7 million from £6.2 million the previous year. This was driven by improved performance in its Nuclear, Land, and Aviation sectors.

Revenue fell 1.1% to £4.39 billion from £4.44 billion, while operating costs reduced by 4.0% to £4.15 billion from £4.32 billion.

Babcock reinstated a final dividend of 3.3 pence per share, taking the total dividend to 5.0p from zero last year.

Babcock improved its underlying operating margins to 5.4% from 4.0%, and reduced net debt by 23% to £435.4 million from £564.4 million.

In financial 2023, the company incurred a loss on disposal and related items, as well as a £100.1 million loss relating to its contract with the UK Ministry of Defence for Type 31 frigates.

The contract further deteriorated by £90 million, which has been recognised in financial 2024 results.

Chief Executive Officer David Lockwood said: ‘Babcock is well positioned to benefit from the sustained uplift in global defence budgets, driven by the need to recapitalise, re-equip and modernise militaries, resulting in an increase in our opportunity set.’

The company said it entered the current financial year in a strong position, with 70% of expected revenue already under contract at April 1.

Management expects to deliver, in the medium-term, mid-single digit average annual revenue growth and underlying operating margins of at least 8%.

Babcock shares were up 5.6% at 515.04 pence each in London on Friday morning.

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