Ultra Electronics revenue growth to fall short of forecasts

Ultra Electronics said its trading performance remained in line with expectations, though full-year organic revenue growth will be "slightly below" previous guidance and there remained some blockages in the contract pipeline.

The FTSE 250 group, a provider of electronics devices for the defence, security, transport and energy sectors, said it continued to endure delays to a small number of export contract awards, which have hit the amount of revenue that can be taken in the current year.

Worst of these is a November 2015 torpedo defence contract for India that has still not been signed.

End market conditions have remained "mixed" since the company's interim results update in August, with pressures from the US Department of Defense's budget disagreements resulting in a contract hiatus that is likely to persist into 2017.

Apart from these hitches, Ultra said order intake across the group has been "robust" and that there "continues to be an improvement in organic trading performance year-on-year and recent acquisitions are performing well".

While export markets dependent on oil and gas revenues remain depressed, Ultra said spending in areas such as surveillance was benefiting from increasing security concerns and geopolitical tensions in some regions.

On Brexit's effect, it said the depreciation of sterling and uncertainty over the UK economy has yet to have a discernible impact on government spending.

The group's balance sheet remains strong and management expect the ratio of net debt to EBITDA to be around 2.0 times by the year end, despite the impact of foreign exchange on dollar debt, while cash conversion is expected to be above 70%.