Overview
- Babcock disclosed Wednesday a £140 million FY26 charge on the five‑ship Type 31 contract, booking about £100 million as a revenue reversal and pushing audited results to late June.
- The company said higher‑than‑expected rework during outfitting drove costs up, citing design changes and the lasting effects of earlier out‑of‑sequence construction that made late fixes harder and pricier.
- The first two ships, both already floated and now in outfitting, carry most of the rework, while ships three and four remain earlier in build and face a smaller impact.
- Despite the charge and a reported drop in underlying operating profit to £293 million, Babcock kept FY27 and medium‑term targets, highlighted stronger Nuclear and Aviation results, and announced a further £200 million share buyback.
- Media noted a 2019 fixed‑price deal with the Ministry of Defence that leaves Babcock covering overruns, with some outlets reporting cumulative Type 31 losses now above £300 million.