Devonport Dockyard operator Babcock International Group Plc has sold its electricity division to an infrastructure service provider for £ 50million as it continues to streamline operations.
The defense and aerospace giant has sold its electrical business, a leading provider of engineering services to the UK overhead power transmission and distribution industry, to M Group Services , based in Stevenage, which works in the water, energy, transport and telecommunications sectors.
The power sector provides high quality work to clients such as National Grid, Scottish Power Energy Networks and Western Power Distribution.
Part of the Babcock’s Land segment, for the fiscal year ended March 31, 2021, it reported total income of £ 70million and earnings before interest and taxes of approximately £ 7million before allocated overheads.
After the sale, the company will become part of Morrison Energy Services, a division of M Group Services.
The divestiture is the latest made by Babcock as he continues to work on a “recovery plan” to deal with the financial losses suffered during the Covid period.
It previously sold the Frazer-Nash Consultancy maritime division to KBR, an American engineering giant, for £ 293million, shortly after divesting its stake in aviation services firm AirTanker Holdings Ltd for £ 126million.
Meanwhile, the UK competition watchdog has investigated Babcock’s £ 10million sale of its oil and gas aviation business. The Competition and Markets Authority (CMA) is assessing whether the deal, which would see helicopter services specialist CHC Group LLC acquire a company that transports crews to offshore oil rigs by helicopter, could lead to a substantial decrease in competition in the UK.
David Lockwood, CEO of Babcock, said: “I am delighted that we continue to make real progress in delivering on our plan to rationalize the group. The company is a perfect fit for M Group Services, and I wish them every success as they continue to grow their operations. “
Babcock has returned to profit after recovering from the effects of the Covid pandemic – with his £ 2bn rebuild of Devonport helping recovery.
The group’s half-year results for the six months to September 30, 2021 showed it had achieved a statutory operating profit of £ 75.4million, compared to a loss of £ 785.3million the previous year. .
Revenue jumped to £ 2.223 billion from £ 2.054 billion during the same period in 2020. This 8% increase in profits was aided by six percentage point growth driven by the work of the division Navy on the new Type 31 frigates, being built at Rosyth, and its nuclear division, particularly its ‘infrastructure ramp-up’, with Babcock currently embarking on a £ 2 billion rebuild of facilities at Plymouth.
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The revenue growth due to the reduction in Covid outages was also highlighted in an investor report, and it led to an underlying operating profit of £ 115.3million, improving the situation of Covid giving an estimated profit of £ 25million year on year.
The group now has an order book of £ 10.9 billion, which includes the Future Maritime Support Program (FMSP), a £ 3.5 billion contract signed in September which runs until March 2026 and which replaces the previous MSDF contract and continues support work for the British Royal Navy through ships, submarines and naval bases.