Opportunities likely to be limited over next 12 months warns defence supplier QinetiQ
DEFENCE supplier QinetiQ has warned investors that future spending restrictions are likely to limit opportunities for new business in the UK over the coming 12 months.
The company, which has a large operation in Malvern, said defence transformation and the forthcoming Comprehensive Spending and Strategic Defence and Security reviews were likely to interrupt order flow.
However, it said that at the same time, this would provide future opportunities for EMEA Services to build on its strong record of delivering ‘more for less’.
In its annual results statement, the company said the portion of revenue under contract at the start of FY16 was similar to a year ago and the balance was supported by a pipeline of opportunities. However, it added that order flow and contract cover would be watched closely over the coming months.
“Overall, given the opening backlog position, expectations for the performance of EMEA Services in the current financial year are unchanged,” it said.
The stagnated character of the sector was reflected in the group’s results, which showed that while orders were up, revenue and profits declined.
Orders rose 3% to £613.6m (2014: £596.9m) but revenue was down 2% at £768.8m (2014: £782.6m) and underlying operating profit was down by a similar level to £111.3m (2014: £113.7m).
Nevertheless, underlying pre-tax profit rose 7% to £107.8m (2014: £101.2m) and the group has recommended a full year dividend of 5.4p per share (2014: 4.6p), an increase of 17%.
In Global Products, the group said the amount of revenue under contract at the start of FY16 was up slightly on a year ago, but the drawdown of American overseas military forces was continuing to depress demand for conflict-related products.
“As the division has a lumpy revenue profile which is dependent on the timing and shipment of key orders, there is a range of possible outcomes for the performance of Global Products in the current year,” it said.
“In balancing the market uncertainties with the strength of the group’s operations, the board is maintaining its expectations for group performance in the current financial year.”
