Peter Rogers: His ship came in

It wasn't enough to be in the navy, so the boss of the defence and services group has gone on a voyage of discovery

Peter Rogers is no stranger to scepticism. In his three years at the helm of the FTSE 250 defence and services group Babcock International, it has been a constant companion.

The gruff, straight-talking former accountant has had to do a lot of heavy lifting to get the owner of the Rosyth dockyard in Scotland into shape.

"What he inherited was not all that appetising," says Sandy Morris, an analyst at ABN Amro. "Peter had to step into this void where it wasn't clear whether the company wanted to be bid for or if it wanted to bid for someone else."

What he was given was an engineering group in the early stages of a massive transition as it responded to City complaints about over-reliance on orders for the refitting and assembling of navy vessels - something for which the Ministry of Defence had dwindling needs.

But as Babcock's transformation has plodded forward, the doubters, one by one, have changed their tune.

After a series of acquisitions, Babcock is now a very different beast. It operates a melange of businesses, from power lines in South Africa, to the nuclear submarine base at Faslane, to railway-replacement services and mobile phone mast networks.

In an interview at the company's central London headquarters, Rogers explains: "When I joined, [the] support services turnover was a bit shy of £100m. It's more than £900m today."

Analysts believe much of the success of the overhaul is down to Rogers, who has built a reputation as a hard-driving manager who can whip poorly performing businesses into shape.

In 2004, for example, he paid around £100m for Peterhouse, an uninspiring rail services company. The deal was loudly questioned by analysts and investors. "Peterhouse was a funny step. You would have said they were low-quality businesses," says Mr Morris. "Peter maintained there was nothing wrong with the businesses and is was all down to mismanagement. I can't say I believed him but he was right, so drat."

Rogers is also known to have little compunction about expressing his views. "He doesn't suffer fools gladly," says one analyst. "Sometimes when he's up there talking, it's like he should be wearing a tricone hat with his hand tucked in his jacket."

Though his approach may grate on some, the results do not, with turnover more than doubling in his time at the helm. After beating analyst estimates at its interim results in November, Babcock is expected to break £1bn in turnover for the first time this year.

Yet it is only relatively recently that the City has sat up and taken notice. Rogers says: "In 2001 and 2002 and 2003, the market quite rightly looked at us with a bit of scepticism and was saying, 'Show us the evidence [of this transformation].' Now we are showing that evidence and they are rating us accordingly."

Babcock shares have nearly tripled during Rogers' reign, and much of that increase has come since last March, when BAE and VT Group admitted to making a joint approach for the com- pany. The deal was eventually scuttled by Babcock's share price, which soared on news of the possible bid.

But while the offer didn't go through, it turned the spotlight on Babcock for the first time in years - and investors liked what they saw. "Moving from an engineering to a services culture was important. That was the thing that needed changing," says Rogers. "You can win the odd [services] contract as an engineer because you may have the skills, but to consistently win you have to be known to deliver consistently good service.

"My guys keep winning contracts. It's embarrassing," he adds. "In my best management speak, it's the journey not the destination, which is, of course, complete bollocks."

Yet for all those years of painstaking transformation, Babcock hasn't quite shaken its image as a naval refitter - a business that accounts for just 5 per cent of group profits. "But I end up talking about it a lot more than 5 per cent of my time," Rogers says with a smirk.

If he has to field so many questions on this subject, that's because the MoD has been pushing for consolidation in the sector - a process in which Babcock is expected to play a key role. BAE is said to be working on a deal to take over the Devonport dockyard, where the UK's nuclear submarines are repaired and refuelled, and Babcock is also thought to be interested.

With deeper pockets and possible government support, BAE looks the favourite, but Rogers hasn't given up yet. "We'll be keeping an eye on that situation. Whether we get involved or not is a question we will answer later on," he says. So is he in talks with the Plymouth yard's owner, DML, which is ultimately owned by Halliburton of the US?

"I didn't say that." So he's not involved? "I didn't say that either. These are clear areas we might be interested in. We know a lot about nuclear submarines and we think it is possible that putting together our skills and those of DML could be the dream ticket. We'd be mad not to look at it."

Rosyth will also be where part of the UK's two massive new aircraft carriers will be assembled.

The journey from stodgy engineering firm to support services conglomerate has not been without its hiccups. Earlier this month, Babcock lost a bid for part of the Defence Training Review, a 25-year military contract worth an estimated £16bn, to a consortium led by QinetiQ. Rogers puts a brave face on the setback: "We hate losing anything. My guys put in a good bid but we got beat by the other people. It happens, so we move on."

He is focusing instead on finalising an agreement with the Government to run the £2bn Royal School of Military Engineering training scheme. The planning phase for this project has dragged on for more than seven years, but he says: "We're close now."

When Rogers took over from his predecessor Gordon Campbell, now chairman, in August 2003, Babcock had already begun the move away from the naval business. Yet it still accounted for more than half of group profits and the company was floundering.

These days, its outlook is very different. Numis Securities, for example, recently increased its 2007 earnings projections for Babcock by 35 per cent, and by 41 per cent in 2008. "I won't take credit for the strategy shift," says Rogers, "but I will take some credit for the implementation."

BIOGRAPHY

Born 29 December 1947.

Career

1972-84: various jobs in manufacturing and marketing at Ford Motor, including managing director, strategic planning for Europe.

1984-85: commercial director of marketing company Imagination.

1985-86: financial director of computer firm Sperry.

1986-98: various jobs at the textiles group Courtaulds, including board director of the chemicals and packaging businesses.

1998-2001: deputy chief executive of Acordis, formed from merger of the Courtaulds and Akzo Nobel chemicals fibres businesses.

June 2002 to now: joined Babcock as chief operating officer, becoming chief executive in August 2003.