But Babcock sees them as an opportunity

ENGINEERING support services firm Babcock yesterday hailed “budgetary constraints” in the public and private sectors, which it said would lead to more outsourcing opportunities.

The company – which runs the dockyard at Rosyth, in Fife, where the new Queen Elizabeth-class aircraft carriers are being assembled – already carries out contracts for a broad range of clients, including British Airways, England’s Highways Agency and Network Rail.

In a short pre-close statement released ahead of November’s interim results, Babcock said its order book currently stands at around £12 billion.

The firm, which also manages the Clyde naval base, highlighted recent contracts wins, including a ten-year deal with UK Aggregates-owner Lafarge and a joint venture with Balfour Beatty to carry out nuclear decommissioning work at Sellafield.

Babcock said: “We remain confident the current economic climate will continue to create significant medium and long-term growth opportunities for our businesses where we are well placed to benefit from the scale of our operations, the breadth of our experience and our track record of delivering both operational and financial efficiencies.”

Christopher Bamberry, an analyst at Peel Hunt, said: “As the outsourcing opportunities come through, this should lead to a re-acceleration of organic growth and a re-rating of the equity, which should be further enhanced by the continued deleveraging of the business.”

PETER RANSCOMBE