Defence supplier Ultra looks to second half as H1 revenues fall
DEFENCE supplier Ultra has said its full year results will be swayed towards a stronger second half after seeing a fall in both revenue and profits during the first six months.
Revenue declined 7.3% to £341m (2013: £367.7m) and underlying pre-tax profit fell 8.5% to £53m (2013: £57.9m).
Rakesh Sharma, Ultra chief executive, said: “The interim results are in line with the group’s expectations. As indicated in March, Ultra’s 2014 performance will be weighted towards the second half, principally reflecting constraints in the US defence procurement process at the start of the period.
“The group has seen the positive effects of increasing stability in the US and UK defence markets, as evidenced by increased order placement towards the end of the first half. The security & cyber, transport and nuclear energy markets, now 43% of the group’s business, remain stable with good trading in the period.”
He said the group, which has operations in Birmingham and Staffordshire, remained in a position for positive growth, boosted by continued investment and a series of acquisitions.
“In addition to the four businesses acquired in the period, R&D investment in new products and business development has been maintained. Encouraging progress has been made across a number of projects such as the successful US Army field trials of Ultra’s ground-breaking ORION radio,” added Sharma.
He said Ultra’s businesses continued to optimise their size to match market conditions through cost management. The group’s order cover for the remainder of the year, together with Government and annual contracts, remains at normal levels, although a potential US Congress Continuing Resolution, in relation to defence appropriations, could constrain orders after October 2014.
“Subject to no further currency fluctuations, the board is confident that this positioning will support performance in the second half and will enable expectations to be broadly met for the full year,” he added.
The company also announced that its joint venture with Sparton Corporation, ERAPSCO, has been awarded a contract worth $166m for the manufacture of sonobuoys for the US Navy.
The contract award is the base year award of a five year indefinite delivery indefinite quantity (IDIQ) contract that has a ceiling value of $810m. The initial award of $166m will be split as $75.5m and $90.5m to Ultra Electronics and Sparton respectively. Under this contract sonobuoys will be produced at Sparton’s DeLeon Springs, Florida facility as well as at Ultra’s USSI business based in Columbia City, Indiana.
Sharma said: “I am pleased that we have secured this important contract that will continue to provide critical sensor capabilities to the US Navy. This contract is a reflection of the increased focus on anti -submarine warfare and ‘pivot to the Pacific’ spoken about by the US Navy.”
