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Babcock selected as preferred bidder for Royal Navy support deal
April 3, 2017 / 7:33 AM / 9 months ago

Babcock selected as preferred bidder for Royal Navy support deal

(Reuters) - Britain’s Babcock International Group Plc (BAB.L) said it was selected as a preferred bidder for a deal worth about 360 million pounds to provide support services to Royal Navy warships over seven years.

The engineering outsourcing firm will manage the technical configuration of systems for two classes of Royal Navy vessels, supply spares and provide in-service support, Babcock said.

Britain’s outsourcing market, the second biggest in the world behind the United States, has been hit in recent months as clients in the private and public sectors delay new spending decisions. This has prompted profit warnings from Capita (CPI.L) and Mitie (MTO.L).

However, Babcock said last month that it expects to benefit from U.S. President Donald Trump’s demand that NATO members spend more on defence.

“Winning all four parts of the MSSP (Marine Systems Support Partner) contract is useful at a time of heightened debate around growth for outsourcing companies,” Jefferies analysts wrote in a note.

The analysts expect the contract to contribute one percent to organic growth and a similar amount to earnings per share.

    Babcock offers engineering and technology-related services to the defence, energy, emergency services, transport and education sectors.

    The announcement comes a week after Babcock shares tumbled following a deal with Britain’s Nuclear Decommissioning Authority (NDA) to end a contract to clean up 12 Magnox nuclear sites.

    ($1 = 0.7971 pounds)

    Reporting by Arathy S Nair in Bengaluru; editing by Jason Neely

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