Why Babcock International Group Is up 32% This Year

LONDON -- Babcock  (LSE: BAB.L  ) has advanced 32% to 969 pence so far during 2012, making the share one of this year's best performers in the FTSE 100 (UKX).

The engineering support services company, which serves projects as diverse as Network Rail and submarine weapons systems, seems to have impressed investors with a series of resilient statements.

During May, Babcock announced 2011 results that showed underlying revenues improve 14% to £3.07 billion, operating profits rise 19% to £329 million and an increase in the full-year dividend of 17% to 22.7 pence per share. The group noted the results marked a record year with growth in all target areas.

During July, Babcock's first-quarter statement revealed its bid pipeline had increased to £13 billion from £9.5 billion in May. In addition to the pipeline, the group announced that its order book remained stable at £13 billion, with around 80% of the group's anticipated revenue for the year already contracted.

Then in November, Babcock disclosed half-year results that showed revenues improving by 6% to £1.56 billion, operating profits rise 12% to £174 million and an interim dividend up 11% to 6.3 pence per share. Chief executive Peter Rogers commented at the time:

Babcock's strong first half performance reflects our leadership in U.K. engineering support services, the continuing growth in our major markets and our increasing international presence. We achieved double-digit growth in underlying profit and earnings and we further strengthened our balance sheet by sustaining our track record of excellent cash conversion. As a result, we have once again been able to increase returns to our shareholders. The strength of our order book and bid pipeline underpin our confidence in the future.

Babcock's next trading statement is expected in January 2013, which may reveal further encouraging news that can impress investors.

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Barry James does not own shares in Babcock. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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