Foreign contract wins enable defence supplier to maintain expectations

Defence sector support services group, QinetiQ has maintained forecasts for its full year trading.

In a Q3 update, the group, which has operations in Malvern and Pershore, said trading over the quarter had been as expected.

“The group maintains its expectations for overall performance for FY18,” it said.

In conjunction with the UK Government, the company is currently bidding for a number of new opportunities in the EMEA region.

It said the new work offered enhanced capabilities while also having the added benefit of driving cost efficiencies.

“Although the UK environment continues to be challenging, this environment creates opportunities for QinetiQ and we remain well placed to support our customers to achieve their objectives,” it said.

Internationally, QinetiQ said it had continued to make good progress during the quarter, particularly in Australia and in the Middle East, where it saw strong demand for its advisory services.

Trading at its Global Products arm was also in line with expectations with encouraging orders coming from North America.

The focus on the global environment marks a significant development in the group’s growth strategy, where it said it was “helping customers improve their capabilities while addressing budgetary concerns”.

In the UK, it said it was making positive steps towards modernising its Defence Test and Evaluation business, where investment had helped secure a £6m contract from the Royal Netherlands Air Force to train Dutch test pilots and flight test engineers until at least 2022.

It also received a £9m order to modernise and develop Electro Magnetic Open Sea Ranges, which play a vital role in helping to protect and ensure the survivability of all Royal Navy surface vessels and submarines.

In the United States, the group secured an $8m order for its TALON robots, while it also secured an additional order from the Australian Department of Defence, worth AU$16m, to extend its Air 7000 strategic support partner contract.

The group also signed an initial £3m contract for the supply of aerial targets and services to a customer in the Middle East, further building its presence within the region.

“We continue to advance our innovation strategy. Our commercial and business model innovation has supported the signing of our first weapon system contract under our Strategic Enterprise framework which has transformed the provision of aircraft test and evaluation services,” it said.

Reflecting on its work with the disruptive technology sector, it said it was now at the leading edge of laser directed energy weapon development, a situation which had seen it secure new bookings.

It also reassured shareholders over the management of its pension scheme.

It said following the latest triennial valuation, the scheme had a surplus of £140.5m as at June 30, 2017. Consequently, it said it would cease making cash deficit recovery payments of approximately £10.5m per annum from March this year.

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