Canada water-bomber firefighting contract fails to ignite Babcock shares
A new £100m contract for Babcock wasn't enough to stop its shares drifting downwards this morning, as market uncertainty and investor scepticism outweighed the new deal.
Shares fell one per cent after news that the engineering firm will operate a fleet of seven “water-bomber” amphibious firefighting aircraft in Canada for the next decade, in a contract win worth around 170m Canadian dollars (£100m).
The engineering services company, which holds 128 government contracts including for nuclear and marine defence, will also manage and maintain the fleet of fixed wing Canadair machines as part of Manitoba’s firefighting efforts, as well as three of its own Twin Commander aircraft.
Babcock chief executive Archie Bethel said the contract “positions us well for any future opportunities in the North American market”.
But Mike van Dulken, head of research at Accendo Markets told City PM the contract was not big enough to turn Babcock’s fortunes around in the eyes of investors.
“Normally contract wins is good news, but is this the biggest contract in the world? Probably not,” he said.
The company’s continued downward trend in the markets coupled with Brexit uncertainty was probably another factor in the continued drop, he added.
The beleaguered company's stock has seen a continuous downward trend in share value since a year’s high of 864p in June.
Last month, Babcock shares were rocked by a scathing report published by a shadowy anonymous group calling itself Boatman Capital Research.
The unregistered entity claiming to be a group of analysts released a note criticising Babcock’s operations, including its relationship with the Ministry of Defence, its biggest customer.
It claimed the FTSE 250 engineering firm faced a number of problems, saying it was “burying bad news about its performance” and saying its leadership was not “not up to the job”.
After several weeks, Babcock eventually refuted the claims, calling them “false and malicious statements”.