Babcock International has maintained its full-year profit guidance after revealing it has a £9.9bn contract backlog.

The defence giant grew its revenue organically by 7% to £2.54bn in the six months to 30 September, with operating profit up 27% to £234.3m in H1.

Babcock said its contract backlog reflects significant land and aviation orders in the H2 period and that it remains on track to deliver on its full-year target margin of 8%.

The company also reported a significant jump in underlying free cash flow, which hit £141m with underlying operating cash conversion of 83%, while its net debt was also reduced by £90m to £56m in H1.

“Thanks to the skills and dedication of our people, Babcock continued its track record of profitable growth with a strong performance in the first half,” Babcock CEO, David Lockwood, said. “Good momentum was underpinned by consistent delivery for our customers against a background of supportive market dynamics.

“We are on track to achieve our expectations for the full year and are pursuing exciting opportunities for sustainable growth and margin expansion, both in the UK and internationally.”

As a result of the performance, Babcock announced a 25% jump in its interim dividend to 2.5p per share, as the group also announced that £49m of an ongoing £200m share buyback scheme was completed in H1.

Despite the figures of growth for Babcock, however, the FTSE 100 company saw its share price dip by 4% in today’s early trading.

Head of markets at AJ Bell, Dan Coatsworth, commented that after a “spectacular run” this year, Babcock’s H1 results had “sparked a negative market response”.

“That’s not to say the first-half results were bad, far from it,” Coatsworth said. “Rising demand in the defence sector, a key theme of 2025, was evident in a meaningful uplift to revenue and profit.

“An increase in the margin suggests the company is remaining disciplined too, and a chunky hike in the dividend and continuing rollout in the buyback programme reflect strong cash generation and a healthy amount of confidence on the outlook.

“However, that is not ‘new news’ for the market which has already priced in a significant boost for Babcock from increased military spending, particularly in Europe.

“Expansion in the nuclear sector, which is still at a fairly nascent stage, could energise investors once more, given Babcock’s expertise in this area.”

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