These half-year results were the last due to be delivered by QinetiQ (QQ.) chief executive Leo Quinn before his departure for Balfour Beatty (BBY). They showed weak US sales offsetting a 13 per cent increase in orders from the European division. The defence contractor sold its US Services arm for $165m (£105m) in May, but is still feeling the effects of the withdrawal of US troops from Afghanistan through its Global Products business.
Together with a one-off $5m cost for separating the US Services and Global Products businesses, these problems left underlying operating profit flat at £49.3m and revenue down slightly. Mr Quinn says the group's remaining US business will now focus on contract-funded research and development projects under the Department of Defence’s peacetime programmes.
He also warned investors that the forthcoming general election could create further uncertainty in the UK defence market - even if QinetiQ is well placed to deliver cost-cutting expertise to its main customer, the MoD. Plans are also under way to expand into new territories, with a managing director recently appointed in Australia and a new office in Ottawa due to open in response to growing demand for defence advice from the Canadian government.
Broker Investec Securities expects adjusted pre-tax profit of £102m for the full financial year, giving adjusted EPS of 14.3p (down from £119m and 15.8p in 2013-14).
| QINETIQ (QQ.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 205p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 204-205p | 12-MONTH HIGH: | 239p | LOW: 191p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | na | |
| NET ASSET VALUE: | 49p* | NET CASH: | £205m | |
| Half-year to 30 September | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 377 | 67.0 | 8.7 | 1.4 |
| 2014 | 366 | 44.4 | 5.9 | 1.8 |
| % change | -3 | -34 | -32 | +29 |
Ex-div:15 Jan Payment:13 Feb *Includes intangible assets of £73.8m, or 12p a share | ||||
