Ultra Electronics H1 profit up; says Brexit may delay government contracts

Defence and engineering firm Ultra Electronics reported a rise in first-half pre-tax profit but said Brexit could affect the government’s commitment to major defence projects.

For the six months to 1 July, IFRS pre-tax profit rose 120% to £32.6m as revenue jumped 10.5% to £366.6m. Underlying pre-tax profit rose to £52.4m from £47.4m.

The company declared an interim dividend of 14.2p per share, up from 13.8p in the first half of 2015.

Chief executive Rakesh Sharma said: "Market conditions have remained largely unchanged since our last preliminary announcement. US defence outlays ended the period close to budget levels but with higher spending in the first quarter compared to the second. The order book has increased over 2016; further, we have been selected for some significant orders in export markets with contract award expected in the second half.”

The total order book grew 23% to £785.7m and Ultra said it has been selected for some significant orders in export markets with contract award expected in the second half.

The company said the UK’s decision to leave the European Union may delay government commitment to some major programmes.

“Nevertheless, the group continues to capture and execute on a broad range of contracts and programmes and to position itself well for future revenue opportunities. Ultra will continue its focus on robust cost control which will help sustain Group margins while our current investment in S3 will deliver further demonstrable savings from 2018.”

Ultra said that taking all these factors into account, it is confident of meeting its full-year expectations.