Flat first half for defence supplier
Defence supplier Ultra Electronics has said its 2017 performance is likely to be weighed towards the second half after it revealed a flat set of interims.
In the six months to June 30, the group recorded revenue of £366.4m (2016: £366.6m). It said the disposal of its ID business in August 2016 impacted revenue by 2.7%. Revenue decreased organically by 6.7% due to the delay in the award of a number of contracts and the higher level of engineering activity compared to the prior year. These factors were offset by exchange rate movements which improved revenue by 9.3%.
The trend was reflected in the underlying operating profit, which came in at £57.6m (2016: £57.7m). This represented an organic decline of 5.4%, which the group said was principally due to the expected lower margin engineering revenue and there was a 2.8% impact on profit from the disposal of the ID business.
Foreign exchange, arising from translating overseas subsidiaries’ results, contributed 8%, while the resulting underlying operating margin was also flat at 15.7% (2016: 15.7%).
Underlying pre-tax profit reached £52.3m (2016: £52.4m), after net financing charges of £5.3m (2016: £5.3m).
Rakesh Sharma, chief executive, said: “Market conditions remain largely unchanged since our preliminary announcement in March. The US Federal budget was not approved until May and this, together with the recent UK General Election, has affected the progress of some contract awards.
“Nevertheless, following the strong order intake in the final part of the period, which has continued through July, we are pleased with our current order position.”
He said Ultra, which has operations in Birmingham and Staffordshire, entered the second half of the year with an order cover of 82% (2016: 84%).
“We anticipate the momentum in contract awards to continue as the year progresses. Furthermore, some additional export opportunities, such as the recently announced Indian defence systems contract, are edging closer to being secured.”
The board has said it remains confident of progress in 2017 and expectations for the full year remain unchanged.
