Tuesday, November 10, 2009

Babcock may sell rail business

Babcock International may sell its underperforming rail business after failing to win Network Rail’s track renewal framework.

The rail arm was the only division not to post profits in an otherwise upbeat set of company results for the half year.

Chief executive Peter Rogers said all options were being considered on the future of the rail business and he would talk to the company's board in December or January with a decision.

Overall Babcock reported a 30% rise in first-half profit to ВЈ66m on flat revenue at ВЈ923m.Turnover at the rail business slumped 25% to ВЈ85m taking it into a loss of ВЈ1.3m.

Over the next few months the rail division will start its withdrawl from the high output track renewals market.


Babcock may sell rail business


This is expected to impact the division’s reported operating profit in the current financial year by around £1.5m and £2.0m in the 2010/11 financial
year, inclusive of restructuring costs.

Babcock said it would expand in defence and nuclear where margins are higher.

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