Defence supplier Ultra looking to second half for growth

DEFENCE supplier Ultra, which has operations in Birmingham and Rugeley, has said it expects a greater second half weighting of its primary defence orders and revenues.

In a trading update ahead of its AGM, the group said market conditions had remained little changed from March.

It said defence spending in the key US market was likely to be measured with the 2013 budget set at roughly the same as 2012.  While little detail has emerged about planned spending, it said some programmes had been initiated and these were likely to see an improvement during the second half.

In the UK, while the Ministry of Defence has acted to stabilise defence spending around a core programme, it said the budget remains under pressure as the Government struggled with its own deficit problems.

Ultra’s other markets remain strong. It said border security and critical infrastructure protection programmes were providing opportunities in both core and emerging markets.

“As the scale of the potential cyber threat is better understood in both the government and private sector, demand for Ultra’s specialist capabilities increases,” it said.

“The group continues to pursue major airport IT opportunities, building on the capability established for the Oman project. Current and future demand for nuclear energy systems and sensors remains buoyant as operators address plant life-extension plans.”

On overall performance, it added: “With defence market uncertainties and related programme delays continuing, Ultra still expects a greater second half weighting of defence orders and revenues.”

In the meantime cost control will remain a priority as individual businesses adjust to their market conditions. Restructuring has continued during the first half of 2013 and will include a £2.4m cost in the TCS radios business. Net savings from the restructuring will accrue in the second half of the year. The first half may also need to reflect higher bid costs depending on the successful negotiation of a new programme in the Far East.

“The group is well positioned on new build and upgrade programmes that will serve to underpin growth into the medium term. Ultra’s proven business model reinforces the board’s confidence that the group will maintain business performance in the short term whilst continuing to position to achieve medium and long-term growth,” it added.

Ultra will announce its interim results for the six months ending June 30, 2013 on August 5, 2013.