Equity Briefing Babcock International and Inland Homes

Equity Briefing: Babcock International and Inland Homes

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Babcock International

Babcock International has had to delay the release of its results for the financial year to the end of March because of the pandemic. The engineering firm is expected to publish them soon, potentially as early as today.

The main revelation will be the impact of its current reviews that is seeing Babcock restructure itself for future growth, but at a hefty cost in the short-term. It has already revealed the review of its balance sheet has identified around £1.7 billion worth of impairments and revealed underlying operating profit will be down around £30 million each year.

This comes as it looks to offload around £400 million worth of assets and refocus on its aerospace, defence and security work in the UK, France, Canada, Australia and South Africa.

This makes the final results hard to gauge, but it did provide an insight into its performance last April, revealing underlying revenue dropped to around £4.69 billion in the year from £4.87 billion and that underlying operating profit dropped to £307 million from £524 million. Analysts are expecting revenue of £4.59 billion and profit of £289.8 million.

Babcock has said profitability will be impacted over the coming years as a result of the restructuring but will set it up for growth in the medium-term. It has said it should be able to return Babcock to growth without having to raise equity.

Inland Homes

Inland Homes is also expected to publish interim results covering the six months to the end of March before the end of June, so expect them to be released early this week.

The company specialises in maximising the value of land by securing planning permission and then deciding what to offload, what to develop itself, and what can be advanced with the help of external investors. It also has an asset management service and a portfolio of rental properties.

In March, the company revealed the level of work of its asset management division, rate of reservations and forward order book had all remained broadly steady from its last set of full-year results, which saw revenue and profits plunge as the pandemic disrupted the business.

Investors will therefore be hoping things have improved over the last few months to set it up for a stronger performance in the second half. The fact it has secured planning permission for three projects, including a new major development in Basildon, and sold-off a hotel in Bournemouth shows some progress has been made during the period.

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