UK defence group Babcock boosted by confident outlook
H1 profit up 10%
Confident on meeting FY outlook
Shares jump 10%
Adds share price in paragraph 1, CEO comment in paragraph 4, analyst comment in paragraph 6
By Sarah Young
LONDON, Nov 13 (Reuters) -Britain's BabcockBAB.L said it was confident on future growth as the backdrop of geopolitical instability drives demand for its defence equipment and services, pushing its shares up by 10%.
The group, which maintains Britain's naval fleet, builds new warships and makes weapons handling systems amongst other things, posted a 10% rise in half-year profit and said it was on track to meet forecasts for the full-year.
Defence companies have benefited from an uplift in orders since the Ukraine war, and Babcock chief executive David Lockwood said that was likely to continue.
"The general tone is positive across the piece," he said, adding that he expected the result of last week's U.S. presidential election to underpin European defence spending.
In the past, Trump has accused European NATO members of spending too little on defense.
Over the coming months, Babcock expects to secure a contract worth around 800 million euros ($849 million) to provide pilot training in France, as well as agree a contract extension in Britain to support its fleet of military vehicles.
"A number of positive developments are flagged in the release, with geopolitical instability and fiscal reality boosting the appeal of Babcock's portfolio," Jefferies analysts said.
Babcock said it was making "good progress" on the closely-watched Type 31 frigate contract for the Royal Navy, a deal which has been problematic and has cost the company 190 million pounds.
Since June, Babcock's shares had fallen 12%. They traded up 10% to 543 pence in early deals on Wednesday.
For the 12 months to the end of March, analysts expect Babcock to post operating profit of 332 million pounds according to LSEG. Underlying operating profit came in at 169 million pounds for the first six months.
($1 = 0.9422 euros)
Reporting by Sarah Young, Editing by Paul Sandle
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