Engineering giant Babcock International is to cut 1,000 jobs – most of them in the UK – as part of a shake-up.
The company, a key player in the UK defence industry, said it was reducing layers of management to create a “more efficient and effective” structure.
It follows a review which will also result in Babcock selling off parts of the business worth about £400m over the next 12 months and take a £1.7bn accounting hit.
The group employs 30,000 people globally – most of them in the UK. The cuts are expected to affect around 850 jobs in the UK.
Chief executive David Lockwood said: “We are creating a more effective and efficient company through our new operating model and, in line with our new strategic direction, will rationalise the group’s portfolio to help strengthen our balance sheet.
“Through our new operating model, the future Babcock will be a better place to work, a better partner to our customers and will be well placed to capture the many opportunities ahead of us”.
The group said it would set out further details when it publishes full-year financial results, adding that it was “cautious” about progress and that the current period would be a “year of transition”.
Babcock has contracts in the aerospace, defence, emergency services and nuclear power sectors and counts the Ministry of Defence as its biggest customer.
The business said in its latest statement that it expected to play a “crucial role” as a partner to the UK government across key defence programmes including shipbuilding.
Babcock has taken a financial hit as a result of the COVID-19 pandemic and in its most recent half-year results, covering the six months to the end of September, reported a 64% fall in pre-tax profits to £55.3m.
It said then that adapting to work during the pandemic had resulted in higher costs while there was also weak trading in its civil aviation operations – trends that the company said had continued when it delivered an update at the start of this year.
Babcock said in its latest announcement that on an underlying basis it expected to post a 2% fall in revenues and 36% decline in operating profits for the year to the end of March.
Shares rose by 26%, with analysts at JP Morgan describing the update as “far more benign than many expected”.