Defence giant Babcock International will slash 1,000 jobs in the UK and overseas as its value plunges by £1.7 billion

• Babcock International is the Ministry of Defence's second largest contractor
• The firm announced 1,000 jobs will be axed in a major overhaul of the business
• Comes after revelation of £1.7 billion write-down in the value of its assetsDefence giant Babcock International has announced it will cut around 1,000 jobs as part of a huge overhaul of the business.

  It comes as the group – which is the Ministry of Defence's second largest contractor – also revealed a write-down of £1.7 billion in the value of its assets.

  The company has said about 850 of the job cuts would be made across its UK operations, with the remainder overseas.

  A turnaround plan would see it simplify the business and raise at least £400 million from the sale of assets over the next year.

  

  +2

  Around 1,000 jobs are being axed at Babcock International after the defence giant revealed write-downs of £1.7bn and plans to sell off a raft of its businesses. Pictured: HMS Prince of Wales aircraft carrier, which Babcock helped deliverIn an update on the group-wide review launched in January, Babcock laid bare its balance sheet woes as it booked £1.7 billion in impairments and charges.

  At the time of the review's announcement, shares in Babcock plunged by almost one fifth.

  It added that group profits are also likely to be around £30 million lower each year, though it said this is smaller than first feared. 

  In its statement to the Stock Exchange the company said that its aims for 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'.

  It said this will reinforce a 'one company culture and remove the duplication and lower quality delivery that a siloed approach delivered'.

  

  +2

  Babcock also sustains the entirety of the UK’s submarine fleet, including through-life support and life extension of Vanguard, Trafalgar and Astute Classes. It also operates two of Britain's three naval bases. Pictured: Plymouth Naval base

  But said: 'This, unfortunately, will result in headcount reductions. 

  'Some of the savings will be recognised across long term projects, for example where they form part of existing contract efficiency assumptions and some savings will benefit our customers via the contract structure.'

  Babcock International: Britain's second largest defence contractor

  Though it can trace its history back to the early 1800s in America, Babcock International was founded in 1891 as a manufacturer working in heavy industry.

  Its 34,220 employees deliver services, largely for public bodies, across four sectors: Marine, Nuclear, Land and Aviation.

  Some of biggest projects to date include supplying the Royal Navy with the UK's two Queen Elizabeth-class aircraft carriers, HMS Queen Elizabeth and HMS Prince of Wales.
  

  Babcock also sustains the entirety of the UK’s submarine fleet, including through-life support and life extension of Vanguard, Trafalgar and Astute Classes. It also operates two of Britain's three naval bases.

  They provide support for Army equipment, including for 30,000 military vehicles and 250,000 weapons.

  The company has operations on five continents, with contracts maintaining naval dockyards in Oman, operating emergency medical helicopters in Australia and support for tackling wildfires in Canada.

  Chief executive David Lockwood, who took the helm last year, said he hopes that for workers affected by the review, the group will be able to find a 'place where people can flourish' through the sale of assets to new owners.

  He added: 'People will see this as a watershed moment when the new company starts to emerge.'

  Babcock employs around 30,000 staff worldwide.

  It said it was too early to give further details of jobs cuts, which businesses are set to be put on the sale block or timings, but would provide further details alongside its upcoming full-year results.

  However, its annual figures are expected to be delayed due to the pandemic and business review.

  The group also warned it remains cautious over profits progress over the year ahead amid a 'year of transition'.

  But it stressed it would not need to turn to investors to shore up its finances through an equity cash call.

  Mr Lockwood said: 'Through self-help actions, we aim to return Babcock to strength without the need for an equity issue.

  '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.'

  Babcock said it wants to focus on being an international aerospace, defence and security company, alongside its naval business, with operations across the UK, France, Canada, Australia and South Africa.