Via Yahoo Finance

Defence giant Babcock has seen shares lift higher after securing a new £1 billion naval contract.

The contractor won the deal to supply the Australian Ministry of Defence with new weapons handling systems for its submarines.

Australia’s new attack class submarines will have the new technology as part of a 50 billion Australian dollar (£26 billion) spending programme which will see the country build 12 new submarines.

The FTSE 250 company said work to design and build the systems will start straight away.

It said the preliminary design stage will take place in Bristol, before it is then handed over to Babcock’s Australian business.

Archie Bethel, chief executive of Babcock, said: “I am delighted that Babcock will play a significant role in Australia’s future submarine programme.

“The ability to transfer our unique Babcock intellectual property, know-how and expertise internationally across the group allows us to play an increasing role in ensuring the defence of countries around the world.”

The deal comes almost a year after Babcock was awarded a £860 million contract to manage some of the Royal Australian Navy’s largest vessels.

Babcock was also recently chosen by the UK Ministry of Defence to supply it with a new fleet of warships, which will be made at its Rosyth facility in Scotland.

Last week, Babcock said its turnaround strategy is being driven by a raft of new projects despite posting a drop in half-year profits.

The group – which is the UK Government’s second-largest defence contractor – reported an 18% fall in underlying pre-tax profits to £202.5 million for the six months to September 30.

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Shares in Babcock increased by 1.7% to 597p.