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UPDATE 1-Babcock lowers revenueGÇï forecast, savings protect profit

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EDINBURGH, Feb 6 (Reuters) - Engineering outsourcer Babcock nudged its 2018 revenue forecast lower on Tuesday due to weaker demand in the oil, gas and defense sectors.

The group, which provides specialist support to groups including Britain's Ministry of Defence, said it should hit its earnings forecast however after cost savings helped it to boost the profitability margin on its work.

It said its short-term pipeline of bids remained strong.

"Supported by a strong order book and bid pipeline, the board remains confident of making good progress in the future, with an increasing proportion of international business," it said.

Babcock said it now expected revenue for the year to March 2018 to come in between 5.3 billion and 5.4 billion pounds ($7.55 billion), compared with an analyst expectation of 5.41 billion pounds.

Although it is much less dependent on discretional spending than its peers such as Capita and Serco, Babcock's shares have been hit by broader uncertainty in the outsourcing sector and concerns about a squeeze on defense-related spending. ($1 = 0.7154 pounds) (Reporting by Elisabeth O'Leary; editing by Kate Holton)