QinetiQ looking at second-half recovery after write-down on 'complex' project

Defence technology company QinetiQ reported underlying first-half revenue of £600.1m in its first half on Thursday, down from £603.2m year-on-year, as its profit after tax slipped to £53.4m from £69m.

The FTSE 250 firm said its profit after tax totaled £46.6m for the six months ended 30 September, down from £57.6m, with underlying earnings per share falling to 8.1p from 10.1p.

Its board declared an interim dividend per share of 2.3p, up from its distribution of 2.2p a year ago.

QinetiQ said its profits were down year-on-year due to the write-down on a “large, complex” project.

Total orders in the period totalled £677.8m, up from £561.6m for the first half of the 2021 financial year, while its total funded order backlog was broadly stable at £3.01bn, compared to £3.09bn at the same time last year.

Net cash rose to £139.2m on an underlying basis from £112.7m, while the company’s net cash flow from operations slipped to £70.2m from £92.7m.

Looking ahead, QinetiQ said it was on track to deliver on its operational performance targets with more than 90% of revenue under contract.

It said it was looking to recover United States revenue performance, targeting second-half revenue in line with the latter six months of the 2021 financial year.

The company said it was also investing in new customer solutions and strategic acquisitions, and was focussing on driving profitable growth into its more-than-£20bn addressable market.

“Overall I am pleased with the continued strategic momentum through the first half of the year,” said group chief executive officer Steve Wadey.

“We continue to deliver for our customers around the world, protecting lives, defending sovereign capability and securing the vital interests of our customers.

“We have delivered good underlying performance with orders up 25% and revenue up 3% organically and we have achieved a number of strategic wins.”

Wadey said that while it was “disappointing” that the performance was impacted by two discrete short-term issues, he said QinetiQ had a “robust plan” to resolve both in the second half.

“We remain focused on delivering the full year whilst continuing to implement our strategy to build an integrated global defence and security company, through both organic growth and strategically-aligned acquisitions.”

At 0912 GMT, shares in QinetiQ Group were down 0.96% at 267.4p.