The Investment column: Babcock
Friday 18 June 1999
Sorting out the one-time boilermaker-to-dockyard management group defeated the combined might of City legends such as Lord King, Jeff Whalley and Tony Gartland. When Dr Parker took the helm in 1993, Babcock was a confused mish-mash of seven separate divisions. The share price was volatile as most of its turnover came from high-risk contracts with power stations and construction companies.
Now Babcock has become a lean machine with just two divisions - engineering services and materials handling. It is winning low-risk, higher margin contracts such as refitting the Ark Royal and the navy's submarines.
The company made a breakthrough by buying Rosyth naval shipyard, a risky punt on the yard's ability to benefit from the Government's strategic defence review. Babcock's bet paid off and Rosyth now has guaranteed refitting orders until 2007.
The disposal of a 50 per cent stake in a water treatment venture has reduced turnover, but profits still leapt last year to pounds 25.3m, 10 per cent ahead of forecasts. Earnings per share doubled to 11.44p from 5.93p.
Prospects are good. Babcock is in consortiums bidding for forthcoming weapons and decontamination contracts. The shares tipped up just 2p to 121p yesterday, giving Babcock a forward p/e of 11. That's higher than its peers, but it undervalues the turnaround. Buy.
Threat of 'catastrophic cascade of collisions' must be averted, warn scientists
Oxford is the least affordable city in the UK, where houses cost 11 times local salaries
Wellcome Image Awards: The most striking images from the world of science, including breast cancer cells under chemical attack and a photographer’s own kidney stone
Space debris orbiting Earth to be destroyed with giant lasers fired from Australia
Swarm of killer bees sting woman 1,000 times
Oscar Pistorius trial: Athlete repeatedly vomits as court hears 'graphic details' of Reeva Steenkamp's autopsy
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
Exclusive: Impact of immigrants on British workers ‘negligible’
Vince Cable: Teachers 'know absolutely nothing' about the world of work
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
- 1 Australian man Rod Sommerville reacts to bite from deadly snake by reaching for cold beer
- 2 North Korea elections: Kim Jong-un wins 100% of the vote
- 3 David Cameron resorts to paying for Facebook fans because not enough people like him
- 4 Steve Irwin’s final words: Cameraman present at death opens up about deadly stingray attack for the first time
- 5 Sharknado 2: Former WWE wrestler Kurt Angle to fight second wave of flying sharks
iJobs Money & Business
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£55000 - £70000 per annum + benefits: Pro-Recruitment Group: In-House Corporat...
£80000 - £100000 per annum + benefits: Pro-Recruitment Group: In-House Opportu...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...