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The new Trump administration could be “good news” for the British defense industry as the incoming US president pressures allied nations to spend more on weapons, according to Babcock’s boss.
Chief executive David Lockwood told the Mail that if Trump continued to pressure other NATO members to meet their spending commitments, this could result in demand “surge” as happened in several countries during his first term.
‘If you combine Trump’s second term with what is happening in Ukraine, I think it further reinforces the need to meet spending commitments. So for us this has to be good news,” he said.
Profits rise: Babcock CEO David Lockwood said that if Trump continued to pressure NATO members to meet their spending commitments, demand could increase.
The comments follow the Autumn Budget, in which Labor reiterated its promise to keep defense spending at 2.5 per cent of gross domestic product, as well as committing to a £2.9bn increase in defense spending for 2026 and an additional £3 billion a year to support Ukraine.
It came as Babcock, which works on the Royal Navy’s Dreadnought-class nuclear submarines and runs naval dockyards at Devonport in Plymouth and Rosyth in Scotland, posted a profit of £184 million for the six months to September 30, up from £ 144 million in the same period. a year ago, while sales rose to £2.4bn from £2.2bn.
Profits were boosted by a strong performance from the company’s nuclear power division, whose sales rose 22 per cent to £866 million.
Lockwood also said the “complex geopolitical context” fueled by conflicts in the former Soviet Union and the Middle East meant demand for Babcock’s services “remains high.”
Shares in the company rose 3 per cent or 14.8p to 514p.
However, the company joined the list of those affected by the increase in employers’ national insurance contributions unveiled in last month’s budget, saying the changes would add £20 million to its tax bill.
Analysts at brokerage Shore Capital warned that higher costs meant they would have to “moderate” their forecasts for Babcock, although they added they remained “positive” about the business.
The positive results followed an update from BAE on Tuesday which revealed Babcock’s rival had racked up orders worth £25bn so far this year amid strong demand from its key British and US markets.
BAE has taken advantage of a boom in defense spending since Russian tanks arrived in Ukraine in February 2022, while it has also benefited from programs such as Aukus, a submarine collaboration between Australia, the United Kingdom and the United States, and the project of GCAP fighter aircraft. which includes Great Britain, Italy and Japan.
BAE shares gave back some of their mid-week gains and closed down 2.7 per cent or 37 pence at 1,344.5 pence.
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