BABCOCK INTERNATIONAL GROUP PLC LONDON (Reuters) - British engineering and support services company Babcock International (>> Babcock International Group PLC) said it would benefit from further government outsourcing in the military after Britain confirmed its defence plans for the next five-years.
Babcock, which already provides warship maintenance services and other training and engineering services to Britain's Ministry of Defence (MoD), said it believed the government would look to outsource more maintenance, planning and logistics work.
"There are a lot of blue collar civil servants in the MoD, they don't all sit at desks, some of them wield spanners," Chief Executive Peter Rogers said in an interview on Tuesday. "More of that will be outsourced and that is what we do."
Unveiling its five-year defence and security plan on Monday, Britain said it would invest an extra 12 billion pounds in defence equipment over the next 10 years, but said it would also cut civilian staff at the MoD by 30 percent.
Shares in the FTSE 100 <.FTSE> member climbed 4 percent to 1,049 pence in early trading, hitting their highest since July, after the company said half-year pretax profit rose 7 percent to 146.3 million pounds and said it was on track to meet expectations for the full year.
Shore Capital analyst Robin Speakman said Babcock's prospects looked bright for the next two years and beyond. "After the defence review yesterday, there's been a realisation that actually prospects for this company and indeed its delivery remains very strong," Speakman said.
The MoD is Babcock's single-biggest customer, accounting for more than 40 percent of group revenue last year.
Rogers said the British government's confirmation of a number of naval, submarine and armoured vehicle programmes was positive for its future workflow, adding it could also benefit from providing training and servicing for new planes, including nine Boeing (>> Boeing Co) P-8 Poseidon submarine-hunting aircraft which are on order.
(Editing by David Holmes)
By Sarah Young
