Tight defence budgets forces Ultra to look elsewhere

ULTRA Electronics, which has operations in Birmingham and Rugeley, says challenges being faced in its traditional defence markets are being offset by good performance in sectors such as transport and energy.

Announcing its preliminary results for the year ending December 31, the firm reported revenue of £760.8m – a 4% increase on 2011’s figure of £731.7m. Underlying profit before tax was up by 0.6% to £115.6m (2011: £114.9m).

Chief executive Rakesh Sharma, said: “Ultra’s results reflect good performances in the transport, energy, security & cyber sectors, offset by the challenges the group faces in its traditional defence markets.

“The UK and US defence markets have experienced a year of budget uncertainty that has delayed the start of new programmes and resulted in incremental-only funding of others, notably in the land domain.

“Mixed conditions across Ultra’s sectors are reflected in the Group’s underlying organic performance. Nevertheless, the group continued its strategy of investment in differentiated specialist capabilities to underpin medium and long-term growth, through increased R&D and through acquisitions.

“In the year, Ultra also added three businesses in the communication, cyber and power sectors that the group has identified as growth areas. Ultra’s constant focus to optimise the cost base of each business has enabled the group’s underlying operating margin to be maintained at over 16%.”

Ultra said it will continue to broaden and diversify its customer base and markets worldwide. Revenue in security, transport and energy now represents 44% of the group total, with revenue outside Europe and North America at 15%.

The firm says it has an order book of £905m.