Babcock axes 1,000 jobs as company ‘remodelled’
Babcock said it will become more focused
Engineering group Babcock is axing 1,000 jobs and will book a £1.7 billion impairment as it prepares to offload a number of businesses.
The company has reviewed its contract profitability and balance sheet and the changes will see a £30m hit to underlying operating profit.
Babcock said it will focus on being an international aerospace, defence and security company with a leading naval business and providing value add services across the UK, France, Canada, Australia and South Africa.
Restructuring will cost £40 million while divesting certain businesses will generate proceeds of at least £400 million over the next twelve months.
The company said the Avincis acquisition in 2014 has not delivered shareholder value with low returns on high amounts of invested capital.
“We are selling our oil and gas aviation business and we are reviewing our options for the each of the aerial emergency services businesses,” it said in an update.
“We are changing our operating model to create a business that is more efficient and effective.”
The company added that it is “reducing layers of management within the business to form a simpler, flatter structure that will simplify how we operate, improve line of sight, shorten communication lines and therefore increase business flexibility and our responsiveness to market conditions.
“This will reinforce a one company culture and remove the duplication and lower quality delivery that a siloed approach delivered. This, unfortunately, will result in headcount reductions. We are also reducing the group’s property portfolio, especially in the UK.