"Babcock International has taken a £140m charge after late-stage design changes and rework on its newest Royal Navy frigates, underscoring the pressure facing Britain's defence supply chain as complex naval programmes run into cost overruns."
"The company said the financial impact stemmed from "higher than expected levels of rework as a result of changes to the design", with remedial work proving more expensive because it is being carried out at late stages of construction."
"Babcock said the £140m charge includes around £100m of revenue reversal linked to revised assumptions about programme completion costs. The Type 31 ships are intended to form a key part of the Royal Navy's future surface fleet, supporting missions ranging from maritime security and intelligence gathering to humanitarian operations and countering illicit activity at sea."
"Despite the setback, Babcock reported stronger overall revenues for the year to March, driven by growth in its nuclear and aviation divisions. However, underlying operating profit fell to £293m from £363m a year earlier, reflecting the impact of the frigate programme charge."
Babcock International recorded a £140m charge tied to late-stage design changes and rework on its Type 31 frigate programme. The impact relates to higher than expected rework caused by changes to the design, with remedial work becoming more expensive when performed later in construction. Five warships are being built at the Rosyth yard in Fife, with the first two already floated after about four years and the remaining three at earlier stages. The charge includes about £100m of revenue reversal linked to revised assumptions about programme completion costs. Babcock reported stronger overall revenues, but underlying operating profit fell to £293m from £363m due to the charge. Demand for defence and nuclear capabilities remains strong as governments increase spending on security and energy resilience.
Read at London Business News | Londonlovesbusiness.com
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