Selling kit to the military is hard work these days, just ask Qinetiq. Government dithering over procurement orders, especially in the US, continues to hamper sales and management admit that’s unlikely to change until 2013. However, a two-year turnaround programme leaves Qinetiq in good health and in optimistic mood.
It has halved net debt and paid down a $177m (£113m) private placement early. Yet, despite incurring a £27m charge for that, pre-tax profit before a big pension deficit reduction and one-off Ministry of Defence payment still grew. Add that charge back in and Qinetic made almost £146m, up 27 per cent. And evidence of its successful restructuring is clear. Underlying operating profit was up a third in the UK where margins broke into double-digits. High demand for spares for its anti-RPG netting Q-Net had profits up over a quarter at the global products business, where returns topped 20 per cent. However, low risk work for NASA damaged margins at the US unit where visibility remains poor. Still, Qinetiq is bidding for $1.3bn of business there - orders for over 100 of its new lightweight Dragon Runner robots are already in the bag and cyber is big business, too.
Broker Investec expects adjusted pre-tax profit of £120.5m in 2013, giving adjusted EPS of 14.7p (2012: £118m/14.6p).
QINETIQ (QQ.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 146p | MARKET VALUE: | £ 964m | |
| TOUCH: | 145-146p | 12-MONTH HIGH: | 160p | LOW: 97p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 4 | |
| NET ASSET VALUE | 91p* | NET DEBT: | 20% | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 1.37 | 51.4 | 7.20 | 4.25 |
| 2009 | 1.62 | 114 | 14.3 | 4.75 |
| 2010 | 1.63 | -66.1 | -9.70 | 1.58 |
| 2011 | 1.70 | 26.6 | 0.80 | 1.60 |
| 2012 | 1.47 | 332 | 39.6 | 2.90 |
| % change | -14 | +1,148 | +4,850 | +81 |
Ex-div: 08 Aug Payment: 07 Sep *Includes intangible assets of £591.1m, or 89p per share | ||||
