Defence giant Babcock International is cutting 1,000 jobs in the next year following a strategic review.

The UK's second largest government defence contractor, which has a base in Cheltenham, employs around 27,000 people in the UK and a further 3,000 worldwide.

Around 850 of the jobs lost from restructuring will be in the UK with the company saying underlying profits will drop by £30million a year.

In a business update, the company said operating profit for the year to March 31 fell by 36 per cent to £307million with underlying revenue down two per cent to almost £4.7billion.

Chief executive David 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."

The statement said restructuring, which will reduce layers of management, would have a cash cost of £40million with a similar annual saving.

It expects to make at least £400million over the next 12 months from selling various businesses within the group, starting with the agreed sale of its oil and gas aviation business.