Qinetiq lifts guidance after decent first half

Defence technology company Qinetiq reported a 37% increase in orders in its first half on Thursday, or 17% on an organic basis, driven by contributions from EDP and MTEQ, as it lifted its full-year guidance.

The FTSE 250 company said revenue growth in the six months ended 30 September was 24% to £603.2m, or 8% on an organic basis, which was primarily driven by EMEA services.

Its underlying operating profit was ahead 16% to £69m, or flat on an organic basis, with a strong recovery reported in the second quarter.

Statutory operating profits fell 10% to £61.6m, due to a £13m property disposal gain in the prior year.

Qinetiq reported a “strong” cash performance, with 134% underlying cash conversion before capital expenditure.

Underlying earnings per share were up 10% at 10.1p, with the board declaring an interim dividend of 2.2p, one third of the 2020 full-year dividend.

On the operational front, the company reported strong growth from EDP, with £367m in orders since inception at the half-year point, and £500m as at Thursday.

The board said the two-year LTPA transition programme was ahead of schedule, and added that international revenue had grown to £213m in the first half of 2021 from £76m in the first half of 2017, making up 35% of group revenue.

Portfolio optimisation was achieved in the period with the acquisition of Naimuri and the disposal of two non-core assets, Boldon James in the first half and Commerce Decisions after the end of the period.

The firm increased its full-year guidance for group performance, saying it was expecting to deliver low double-digit revenue growth, and low to mid-single digit growth on an organic basis, with a full-year margin consistent with the first half.

While it remained “vigilant” about the potential risk of further impacts from the Covid-19 pandemic, Qinetiq said it had £575m of revenue under contract for the second half, compared to £450m in the prior year.

“We have delivered an excellent first half performance despite a challenging environment,” said group chief executive officer Steve Wadey/

“We are entering the second half with confidence, with a significant order backlog, strong customer focus and an evolved strategy reflecting the increasing ambition of the group and changing customer needs.

“We are increasing our full year guidance whilst proactively managing the potential risks from further Covid-19 disruption.”

At 0959 GMT, shares in Qinetiq were up 6.39% at 309.6p.