Qinetiq FY underlying profits fall despite modest revenue growth

Defence firm Qinetiq said on Thursday that full-year underlying operating profits had fallen in the year ended 31 March despite seeing a modest uptick in annual revenues.

Qinetiq said annual revenues had grown from £1.27bn to £1.32bn, with orders up 9% on an organic basis to a record of £1.23bn and its funded order backlog rising to £2.94bn from £2.82bn a year earlier.

Revenues were up 26% in Australia and 12% in the UK and, while US recovery was slower, Qinetiq stated momentum was now building, with orders up roughly 20%.

However, underlying operating profits slipped from £151.8m to £137.4m, principally due to a £14.5m project write-down, and underlying profits after tax dropped to £118.1m from the £126.1m reported at the same time twelve months earlier. Underlying cash conversion rose from 98% to 114%.

Underlying earnings per share slipped from 22.1p to 20.6p but Qinetiq's full-year dividend per share rose from 6.9p to 7.3p.

Looking forward, Qinetiq maintained group expectations for the 2023 trading year, with £900.0m in revenues under contract amid "heightening market needs" for its "distinctive offerings".

Chief executive Steve Wadey said: "Following a challenging first half we delivered a strong second half and achieved good underlying operational performance, ahead of market expectations. Recent world events have reinforced the long-term needs of our customers, including capabilities utilising differentiated technology, and test and training solutions which are directly aligned with our strategy.

"With a clear focus on disciplined execution of our strategy, increasing demand for our solutions, and good revenue coverage, we have positive momentum and are on track to deliver sustainable global growth."

As of 0955 BST, Qinetiq shares were down 2.55% at 356.07p.

Reporting by Iain Gilbert at Sharecast.com