Ultra uses interim growth to insulate against H2 uncertainties
DEFENCE supplier Ultra Electronics, which has operations in Birmingham and Rugeley, has announced an 8% rise in half year revenues despite operating in what it describes as “difficult market conditions”.
However, it has warned the second half could be difficult, especially in the vital US markets where continuing defence cuts and the forthcoming presidential election are likely to render the picture uncertain.
In the six months to June 30, 2012, revenue rose to £370.2m (2011: 343.5m), while underlying pre-tax profit rose 3% to £57.5m (2011: 55.8m). Underlying e4arnings per share increased 6% to 58.1p, with the interim share dividend rising 4% to 12.2p.
The company said the results would enable it to continue re-investing for future growth, while it had already committed more than 6% of revenue into new business and product.
The period also saw the group complete three acquisitions and it said there was scope for further growth should suitable businesses become available.
Rakesh Sharma, Ultra’s chief executive, said: “These interim results reflect a steady performance in difficult conditions within Ultra’s core defence markets. In the US, the forthcoming presidential election and the threat of sequestration combine to fuel funding uncertainties that will probably continue into 2013.”
He said that in the UK, the prolonged effort to balance the defence budget had led to uncertainty in the procurement process, with contract officers unwilling to commit funds and delaying programmes.
Within Ultra’s non-defence markets he said there were good performances across the group, while investment increased in new products and business development which, together with the acquisition of the three companies, would underpin future growth.
“The board remains confident in the group’s strategies which are constantly to broaden Ultra’s portfolio of products and services that are positioned on a large number of international platforms and programmes in the defence, security, transport and energy markets,” he added.
“Further, the group looks to broaden its customer base with sales outside the UK now representing over 70% of group revenue, while growing sales in the security and cyber, transport and energy markets account for about 45%.”
The business continues to be cash generative and Mr Sharma said the balance sheet strength would maintain investment, both in acquisitions and internally, in market sectors where customers would prioritise and protect expenditure.
“While recognising slower end markets and lower than normal visibility in the defence sector, the group has a resilient business model and this underpins the board’s confidence of continued progress in 2012 and beyond,” he added.
