Babcock International has reported a jump in revenue to £5.27bn in its latest annual results, despite the defence contractor taking a £140m hit to its profits from a recurring charge on its Type 31 contract

The FTSE 100 company’s latest revenue was up from £4.83bn last year, as it stated that an estimated £100m of the revised costs for its Type 31 warships had reversed its latest revenue figure.

Babcock, announcing its full-year results covering the 12 months to 31 March, said it had still delivered a “strong underlying operational and financial performance” in FY26.

The defence company’s underlying operating profit increased by 19% at constant FX to £433m, excluding the Type 31 charge. Including it, underlying operating profit was £293m.

In an update about its Type 31 contract, which was awarded to the company in 2019 to deliver five ships for the Royal Navy, Babcock said that it had floated off the first and second ships for the programme in FY26, but that the bulk of the remaining work now relates to outfitting and commissioning.

“During the outfitting stage we have experienced higher than expected levels of rework as a result of changes to the design and the long-term impacts of out-of-sequence build activity earlier in the programme,” Babcock said in a statement.

“Whilst the number of such rework events is not entirely unexpected, the work is being performed in the later stages of completion and therefore is more complex and more costly.

“As a consequence, we have performed an engineering maturity review, and we have updated our financial estimates to complete the programme, given the elevated levels of work due to engineering change and productivity. These re-estimates not only cover the production costs of material and personnel, but also an increased programme risk contingency.”

Babcock’s latest figures follow its announcement in January that David Lockwood had decided to retire as group CEO, to be succeeded by Harry Holt, the previous chief executive of Babcock’s nuclear sector. As of last month, Holt assumed the role of deputy CEO and will join the company’s board in June.

The defence company’s expectations for FY27 remain unchanged, as it cited “good revenue visibility”, and revealed that around 70% of its revenue is under contract as of 1 April 2026 – a similar percentage to last year.

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