Babcock International Group's shares fell 4.2% on the London Stock Exchange after the defence contractor announced a £200m share buyback scheme, citing uncertainty over a potential £1.5bn frigate contract charge in its FY26 results.
The company's FY26 results are expected to be impacted by a delay in the UK's Type 31e frigate programme, which may result in a £1.5bn charge. This charge is a major concern for investors, as it could significantly affect the company's profitability and cash flow.
Babcock International Group's Chief Financial Officer, Peter Rogers, stated that the company is working closely with the UK Ministry of Defence to resolve the issues surrounding the Type 31e programme.
The £200m share buyback scheme is designed to boost shareholder value and demonstrate the company's confidence in its prospects. However, the move has been met with caution by analysts, who are concerned about the potential impact of the £1.5bn charge on Babcock's financials.
Babcock International Group's shares have been performing well in recent months, with the company benefiting from a surge in demand for defence services. However, the uncertainty surrounding the Type 31e programme has cast a shadow over the company's prospects, and investors will be closely watching the FY26 results for any signs of weakness.