The group which makes and helps maintains Britain’s warships, had already flagged it would take hefty impairment charges for loss-making contracts and charges of GBP2bn were largely responsible for the GBP1.72bn loss (GBP89mln loss) in the year to March 2021.
Underlying profits were down 40% at GBP222mln, with revenues for the year flat at GBP4.2bn and an order backlog of GBP8.7bn.
“We have a plan in place to strengthen the group without the need for an equity issue,” said chief executive David Lockwood.
Babcock said it intends to sell assets worth GBP400mln over the next year and will streamline management on top of 1,000 job cuts already announced.
Higher COVID-19 costs and uncertainty over new variants will also drag on this year, it added, while it has also been hit by the civil aerospace slump due to virus travel restrictions.
Net debt was GBP772mln at the end of March, with the engineer expecting cashflow to be slightly negative this year.
Shares fell 11% to 271.1p.