QinetiQ on target to meet FY expectations despite tough market

QINETIQ Group has warned conditions in the UK and US defence markets are set to remain challenging as deficit-reduction measures add to ongoing uncertainty. However, it remained confident its full-year results would meet expectations.

In the meantime, the group, which has already axed hundreds of jobs from its operation in Worcestershire, has said it will continue to keep a close watch on costs.

In a trading statement covering the period since November 23, the company said: “In this environment, the group’s priority remains completion and embedding of its 24-month self-help programme, which is building a stronger and more competitive QinetiQ.”

Despite external forces, it said UK Services continued to benefit from better project execution and from having lowered its cost base ahead of the expected revenue reduction.  In December 2011, the division won a four-year, £38m contract broadening the scope of the naval combat systems integration services which it delivers to the UK Ministry of Defence.

In the US, it said the focus was also on delivering a more competitive cost base and upgrading its business development process and resources.  In late 2011, US Services was selected for the Training Systems Contract III which provides the US Naval Air Systems Command Team with a quick-reaction acquisition vehicle to access training and simulation capabilities.

It said its Global Products division continued to perform well with military product sales and spares shipments in the US driving a stronger Q3 than expected.  During the period, initial orders were received for the new Dragon Runner 10 robot and work commenced on the development of the E-X-Drive® electric drive transmission for the US Ground Combat Vehicle programme.

“However, as market uncertainties are resulting in lower visibility than normal, the outlook beyond the current year is unchanged. The board continues to have confidence in QinetiQ’s ability to build significant value over the medium term,” it added.

Ultra secures US Naval contract

ULTRA, which has operations in Birmingham and Staffordshire, has been boosted with the award of a new US naval contract.

The electronic company said its USSI business, based in Columbia City, Indiana, had received US Navy contracts for sonobuoys worth more than £12.6m ($20m).

The contract brings the total amount awarded since the beginning of the fiscal year to Fiscal Year 2012 began in October 2011 to £18.44m ($29.2m). The contracts have been awarded through ERAPSCO, Ultra’s joint venture with Sparton Corp, which supplies all sonobuoys to the US Navy.

Rakesh Sharma, Ultra chief executive, said: “Ultra’s focus on innovation coupled with its expertise in high quality manufacturing and on-time delivery has resulted in these further orders for sonobuoys. We are pleased that the US Navy continues to recognise the support it receives from USSI and ERAPSCO by awarding these contracts. “