Babcock International has agreed a 10-year £50 million deal to manage and maintain heavy mobile equipment in Lafarge’s UK aggregates and cement businesses.
The defence and energy giant also said it is negotiating with Lafarge to roll out the “innovative management and maintenance model” internationally, including an £100m US deal.
Posting a confident pre-close trading update to the Stock Exchange, Babcock said the move “marks a global first in the mining and construction fleet management sector”.
Babcock also reiterated its comments in its interim management statement in July, when it said financial performance is in line with expectations. It said strong cash generation across the businesses means it expects to see further reduction in net debt at the half year in November. Net debt was at £729m when it posted its annual results in March. Its order book remains at around £12 billion today.
The company said: “During the first half of this financial year the group has experienced good trading conditions in a market where our key customers face financial and budgetary constraints. We believe this environment will continue to drive an increase in new outsourcing opportunities in both the private and public sectors, as evidenced by the continuing growth of our bid pipeline.”
The firm also said it is seeing the benefits of the full integration of the VT Group acquisition, but reiterated its July stance as it continues to consider offloading the group’s US defence operations, saying they “do not meet the group’s strategic objectives”.
Babcock said a joint venture with Balfour Beatty for phase 1 of the Silos Maintenance Facility (SMF), under the hazard reduction programme at Sellafield, means that over the past 12 months, Babcock, with various partners, has secured the last three major projects to be awarded at the nuclear site.
The company has also been awarded a four-year £27m contract under the MoD’s new framework for the management of its non-combative white fleet.