Babcock International has posted a 51% surge in operating profit to £363.9m in its preliminary full-year results, as the group’s CEO hailed a “new era for defence”.

The defence company’s revenue also grew 11% on an organic basis to £4.8bn in the year to 31 March, driven by growth in the group’s nuclear and marine divisions.

Babcock said its 2025 financial year had been “pivotal”, stating that its performance was “particularly strong” with full-year results ahead of guidance, resulting in a contract backlog worth £10.4bn.

The FTSE 100 group also acknowledged a “complex and rapidly changing” global context for the defence sector, which it said had highlighted the “increasing relevance” of its capabilities.

Following its performance in the year, Babcock has recommended a final dividend of 4.5 pence per share, taking its total to 6.5 pence per share, a level up 30%. The group has also announced plans for a £200m share buyback scheme which it intends to execute over the 2026 financial year.

“This is a new era for defence,” Babcock CEO, David Lockwood, said. “There is increasing recognition of the need to invest in defence capability and energy security, both to safeguard populations and to drive economic growth.

“Our specialist capabilities are increasingly relevant and, with a growing set of opportunities before us, Babcock is committed to play its part in driving prosperity alongside its customers.

“Our strong financial performance in FY25, with operational momentum across the business, has enabled us to upgrade our medium-term guidance, increase our dividend and launch a £200m share buyback programme for the first time in the company’s history.”

In its outlook for the 2026 financial year, Babcock said it was expecting to achieve an underlying operating margin of 8%, which would see the group hit its previous medium-term target at least one year earlier than anticipated.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, commented that as military tensions “ratchet up across the world”, the geopolitical situation is set to keep prospects for defence stocks “solid”.

“Lockwood has heralded this moment as a ‘new era for defence’ and his comments seem particularly timely as the crucial NATO summit takes place and the UK Government is set to buy 12 new fighter jets to join Nato’s airborne nuclear mission,” Streeter added.

“Such is the seriousness of the threats facing the alliance that members appear to have committed to spending 5% of GDP on defence and related infrastructure at summit in The Hague.

“This is being seen as a big win for US President Trump who has, for years, berated allies for contributing way less than the US to NATO budgets. Brevity is expected in the wording, but such commitments will have long-term repercussions.”

---