The British defence company Babcock International is to cut 1,000 jobs after revealing write-offs of £1.7bn and plans to sell off a raft of businesses. The company, the Ministry of Defence’s second-largest contractor, said 850 jobs would go in the UK, with the remainder overseas. It employs about 30,000 staff worldwide. The job cuts are expected to save £40m a year, and will result in a one-off cost of about £40m. They form part of a plan to turn around the business by simplifying its operations, alongside asset sales that are expected to raise at least £400m over the next year. Babcock declined to state where the job cuts would fall, saying that they were subject to a consultation process. It is headquartered in London and has dockyards, offices, equipment testing centres and research and development sites across the UK. After conducting a review of its contracts, Babcock said it realised that some were not as profitable as it had hoped, and booked £1.7bn in impairments and charges. It warned that annual operating profits are likely to be £30m lower than previously. The company had net debt of £750m at the end of March, less than City analysts’ estimate of £920m. It has pencilled in an underling operating profit of £307m for the current year, down from £524m last year, before the impact of the review. Despite the huge write-offs, the update was better than expected, and investors and analysts were also cheered by Babcock announcing that it would not need to tap shareholders for funds. The share price jumped 34% to 325p at one stage, and later traded 30% higher. The company’s chief executive, David Lockwood, who took the helm last year, said he hoped that workers affected by the cuts would 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 said it would focus on being an aerospace, defence and security company with a leading naval business across the UK, France, Canada, Australia and South Africa. It supports the UK navy’s ships and crews. Just over two years ago, it closed the historic Appledore shipyard in Devon after failing to find enough work to sustain the yard. Analysts led by Joe Brent at Liberum said the write-offs were “larger than many had expected but management is right to clean up the balance sheet once and for all”. “This is not split between the different divisions, but we expect the majority relates to aviation … The vast majority is one-off and the only cash impact is the £30m ongoing profit impact, but there are also some working capital writedowns. We do not expect a significant ongoing cash impact that we had from [rival] Serco’s onerous contract provisions.”