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David Lockwood, the head of Babcock International and architect of a turnaround that transformed the defence contractor into one of the UK’s best stock market performers, will retire at the end of this year.
Lockwood, who became chief executive in September 2020, will be succeeded by Harry Holt, head of its nuclear business, the company said on Friday. It chose Holt following an “extensive internal and external search process”, Babcock said.
Holt previously spent more than a decade at Rolls-Royce, including seven years in the company’s executive team in a number of senior roles, including as head of its nuclear division. He was previously an officer in the British Army.
Lockwood led a five-year restructuring of Babcock, which builds warships and maintains and supports Britain’s submarines as well as its naval fleet. It also maintains multiple support programmes across the armed forces.
The group re-entered the blue-chip FTSE 100 index in March after a seven-year absence, reaping the benefits of the turnaround and an increase in defence spending by the UK and its Nato allies. Before Lockwood’s arrival the company had faced operational issues and criticism about its accounting.
Babcock was one of the star performers in the FTSE 100 last year, thanks to rising revenues, a growing order book and higher shareholder returns. Its Cavendish Nuclear division, which is involved in civil nuclear projects including Hinkley Point C, has also performed well.
Babcock’s shares have soared almost 600 per cent over the past five years, valuing the group at almost £7.3bn. They initially fell 1.5 per cent after the news of Lockwood’s departure but were flat by mid-morning trading.
Lockwood, who is nearly 64, said it had been a “Christmas decision” to retire.
Babcock, he told the FT, was in “a very strong position, we’ve got money, we are well positioned with customers” but a lot of the choices coming up had a “four to five-year duration”.
“I’ve always believed that you should aim to see through your decisions . . . so although I am confident I have a year or two in the tank as an executive, I really had to persuade myself that I had four or five.”
Lockwood, who is also president of ADS, the industry trade lobby, played down concerns about delays to the government’s defence investment plan. It was more important to get the plan, which will set out funding priorities, right and make sure it could be delivered, he said.
Before he joined Babcock, Lockwood was chief executive of aerospace and defence group Cobham, which was bought by US private equity group Advent International for £4bn in 2020. Before that he ran UK electronics group Laird, which was later bought by Advent.
News of Lockwood’s departure could be “taken negatively”, according to analysts at Berenberg. However, they added that they viewed Holt as a “strong replacement given his impressive track record as CEO of the nuclear segment — the fastest-growing and highest-margin segment within Babcock since 2023”.
The company on Friday also said trading in the third quarter was strong and it was confident of meeting its growth targets for 2026. There could be upside to current forecasts depending on the timing of an Indonesian deal.
Britain in November agreed a £4bn deal with Indonesia, led by Babcock, to jointly develop the country’s maritime capability.