Defence and engineering giant Babcock International Group Plc has sold a marine division consultancy with offices in Plymouth for £293m as it works on a “turnaround plan” to tackle financial losses.
The company – which operates the dockyards at Devonport, in Plymouth, and Rosyth, in Scotland – is to sell Frazer-Nash Consultancy to KBR, an American engineering giant.
It marks the end of a 14-year partnership between Babcock and the Surrey-based engineering and technology consultancy which sprung out of classic carmaker Frazer-Nash.
The consultancy, which works on submarine design and naval weaponry among other roles, is part of Babcock’s Marine sector, which is centred around its operation in Devonport.
It employs about 900 people working in the healthcare, energy, defence and transport sectors. It has nine UK sites, including at the Millfields in Plymouth, in Gloucester and in Bristol, and four in Australia. It reported revenue of just over £100m for the 2019/20 financial year and pre-tax profit of £13.5m. As of March 31, 2021, gross assets were £79.9m. The deal will need approval from Australian authorities, but Babcock shareholders will not get a vote on the disposal.
In July 2021, Babcock reported a £1.64bn operating loss for the year, and net debt – although falling – lay at £1.4bn. David Lockwood, chief executive, has said the business would be able to turn around without raising cash from shareholders.
Babcock had already revealed plans to sell businesses worth £400m during the next 12 months. The sale of Frazer-Nash Consultancy will fill a large part of that hole, and the money will be used to pay off debt.
Mr Lockwood said: “We are making real progress on our plan to streamline and focus the group on our key markets. Divesting at least £400m of businesses in our targeted disposals programme will enable us to reduce complexity and increase our focus as we return Babcock to strength. Frazer-Nash Consultancy is a good fit for KBR, and I wish them every success in growing the business further.”
Frazer-Nash traces its roots to the 1920s, when Archie Frazer-Nash founded the eponymous carmaker. During the Second World War the company started producing machine guns, and it maintained Government contracts after the war. In 1971 the consultancy wing of the Frazer-Nash group was founded. It was bought by its own management in 1990.
Business Live’s South West Business Reporter is William Telford. William has more than a decade’s experience reporting on the business scene in Plymouth and the South West. He is based in Plymouth but covers the entire region.
To contact William: Email: [email protected] – Phone: 01752 293116 – Mob: 07584 594052 – Twitter: @WTelfordHerald – LinkedIn: www.linkedin.com – Facebook: www.facebook.com/william.telford.5473
Stay in touch: BusinessLive newsletters have been re-designed to make them even better. We send morning bulletins straight to your inbox on the latest news, views and opinion in the South West. Get our breaking news alerts and weekly sector reviews too. Sign up now – it’s free and it only takes a minute. To sign up for Business Live’s daily newsletters click here
And visit the Business Live South West LinkedIn page here
In July, Babcock revealed revenue had dipped from £4.42bn to £4.18bn with its operating loss widening from the £75m deficit it reported in 2020. The firm’s full year results, for the year to the end of March 2021, revealed the company is still being hit by Covid-related problems and must “remain cautious”.
Babcock’s oil and gas, aviation and emergency rescue divisions have been badly affected by the Covid pandemic and its consequent impact on aerospace, and Covid restrictions delayed work on key contracts. In April Babcock announced it would make about 1,000 redundancies and would slim down its management structure, although union bosses were hopeful Plymouth would avoid many job losses.