Summary of Babcock International Group (BAB) 2025 Investor Day Company Overview - **Company**: Babcock International Group - **Focus**: Marine sector, specifically naval engineering and shipbuilding - **Key Participants**: Sir Nick Hine (CEO - Marine), David Lockwood (CEO), Paul Watson (MD - Arrowhead), David Mellors (CFO), among others [1][2] Industry Insights - **Marine Sector Importance**: Marine accounts for approximately one-third of group revenue in FY '25, indicating its scale and strategic relevance [3][4] - **Global Demand**: There is a growing demand for sovereign naval capabilities and significant export opportunities, with expectations for this trend to accelerate [3][4] - **Revenue Streams**: The Marine business generates around $900 million in revenue, representing about 20% of the group's total [4][9] Business Model and Strategy - **Core Business Streams**: Focus on design, build, and support activities, with a current revenue mix of approximately 25% build and 75% support, expected to shift towards more build in the future [9][10] - **Long-term Partnerships**: Strong relationships with industrial and governmental partners globally, emphasizing strategic partnerships built on trust and shared ambition [11][12] - **Competitive Edge**: Unique capabilities in advanced naval engineering, systems integration, and long-term support, creating high barriers to entry for competitors [17][18] Growth Opportunities - **Order Book**: The current pipeline stands at $22 billion, with expectations for strong growth as global naval investment rises [11][41] - **Type 31 Program**: A cornerstone of the naval shipbuilding capability, with significant operational progress and a strong relationship with the customer [27][31] - **Export Strategy**: The Arrowhead 140 frigate design is proving attractive in naval export markets, with a flexible production model that meets modern naval needs [32][34] Financial Performance - **Revenue Generation**: Shipbuilding generates over £200 million annually, with additional revenues from advanced manufacturing capabilities [52] - **Future Projections**: Potential additional annual revenues of £250 million to £350 million from securing two major build programs over the next three years [78] Challenges and Considerations - **Capacity Constraints**: Addressing infrastructure and workforce capacity is crucial for meeting delivery demands, with ongoing investments in Rosyth infrastructure [105] - **Sovereignty vs. In-Country Building**: Balancing opportunities between supporting in-country builds and maintaining domestic production capabilities [100][102] Conclusion - **Strategic Positioning**: Babcock is well-positioned for growth in the global naval sector, with a clear strategy focused on sustainable, profitable growth through targeted investments and partnerships [86] - **Future Outlook**: The company is committed to evolving its capabilities and expanding its global footprint, aiming to become a multi-domain naval prime [36][39]

Marine Sector Overview - The Marine sector has a strong platform for growth due to specialist capabilities and high barriers to entry[6] - Structural growth is expected from global naval fleet recapitalisation[6] - Increased opportunities are driven by design and build activities with a pipeline exceeding £17 billion and long-term support with a pipeline exceeding £5 billion[6] - The Marine sector is confident in delivering MSD growth and margin improvement to over 9% in the medium term[6] Financial Performance and Pipeline - Marine FY25 revenue is £0.9 billion[9] - The contract backlog for design and build is £0.9 billion, with a pipeline exceeding £17 billion[16] - The contract backlog for support is £1.5 billion, with a pipeline exceeding £5 billion[16] - Advanced manufacturing has a medium-term pipeline exceeding £500 million[68] Design and Build - Design and build revenues are projected to double to £500-£600 million over the medium term[39] - Advanced manufacturing has a backlog of approximately £360 million over 4 years for the US-UK Common Missile Compartment programme, with approximately 80% market share[56]