£12bn Babcock is a real high-flier

Deals worth more than £500m to run baggage handling at Heathrow and weapons handling for an international client saw the FTSE 100 support group Babcock International declare yesterday that it will hit City expectations for the year to April.

Babcock, best known for maintaining the Royal Navy's submarines, also said its order book had contracts worth £12bn, having won £1bn worth of business since November.

Last month it was named preferred bidder on £440m worth of contracts at Heathrow, including maintaining British Airways' fleet on the ground and running baggage-handling operations for the next five years. It already has contracts at Gatwick, Stansted and Edinburgh airports, as well as Vancouver and Dubai airports and Schiphol in Amsterdam.

"Across our businesses, market conditions have been positive," the engineering services group said. Babcock's bid pipeline has grown to £15.5bn from £14bn in January, largely due to a potential Ministry of Defence contract to manage food, clothing, fuel and medical supplies.

City analysts reckon full-year pre-tax profits will be around £313m, and they expect a dividend of 25p. Investec's John Lawson said: "The stock is one to own."

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