Qinetiq (QQ.) has confirmed that its advisors have approached prospective buyers of the US defence business, thought to be worth at least £200m; paving the way for a sale of the troublesome division. A decision will be made by the March year-end. In the meantime, management still thinks full-year results will meet expectations, despite a difficult first half.
With the US military pulling out of Afghanistan, order delays and heavy cost-cutting elsewhere, underlying operating profit fell 38 per cent to £59.2m. US orders were down 13 per cent to less than £248m and profit there was 30 per cent lower at £9.4m, although better than the second half of last year. Profit at Qinetiq's notoriously lumpy global products division slumped, too, as last year's huge orders for anti-grenade netting product Q-Net were not repeated. It is, however, selling more Talon robots and trials of its pipeline monitoring system, Optasense, already bought by Shell, have been a success. "Watch this space," says chief executive Leo Quinn. In the UK and elsewhere, orders were up and profit grew 5 per cent to £40.3m. Qinetiq is winning business overseas, notably in Australia, South Korea and the Middle East, and further orders are likely.
Broker Investec Securities expects full-year adjusted pre-tax profit of £114.3m, giving adjusted EPS of 14.9p (from £152.1m and 18.7p in 2013).
QINETIQ (QQ.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 209p | MARKET VALUE: | £1.38bn | |
| TOUCH: | 209-210p | 12-MONTH HIGH: | 215p | Low: 178p |
| DIVIDEND YIELD: | 2% | PE RATIO: | na | |
| NET ASSET VALUE: | 72p* | NET CASH: | £120.5m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 686 | 80.0 | 9.90 | 1.10 |
| 2013 | 600 | 72.6 | 9.50 | 1.40 |
| % change | -13 | -9 | -4 | +27 |
Ex-div: 15 Jan Payment: 14 Feb *Includes intangible assets of £324m, or 49p a share | ||||
