Qinetiq (QQ.) finally sold its troublesome US services business last month for up to £130m. And now the defence contractor has beaten City profit forecasts, after its Europe, Middle East and Africa (EMEA) services division grew organic sales for the first time in five years. Short-term uncertainty around UK defence budgets could limit growth this year, but there could be another surprise elsewhere.
America's withdrawal from Afghanistan has hurt. Sales of anti-RPG netting Q-Net plunged by $100m (£59m), more than halving underlying operating profit at the global products business to £27m. Strip out a £41.9m write-down there, and an £84m impairment at the US services unit, and profit fell by a fifth to £133m - lower than expected despite a £6m gain from winning a legal dispute. Sales at the core EMEA business grew 3 per cent at constant currency, meanwhile, and profit rose 2 per cent to £86.7m. Orders jumped a tenth to £448m.
Demand for Qinetiq's advisers on communications and intelligence is high, both here and abroad. Its electronic surveillance system has made sales, too, and a new high-tech 'warrior' vest could be the new standard for Nato troops. Timing, however, is unpredictable.
Broker Investec Securities expects adjusted pre-tax profit of £98.9m in fiscal 2015, giving adjusted EPS of 14.4p (from £119.4m and 15.8p in 2013).
QINETIQ (QQ.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 202p | MARKET VALUE: | £1.3bn | |
| TOUCH: | 201-202p | 12-MONTH HIGH: | 239p | LOW: 179p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | na | |
| NET ASSET VALUE | 57p* | NET CASH: | £171m | |
| Year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 1.6 | -66 | -9.7 | 1.58 |
| 2011 | 1.7 | 27 | 0.8 | 1.6 |
| 2012 | 1.5 | 316 | 37.9 | 2.9 |
| 2013 | 1.3 | -137 | -20.5 | 3.8 |
| 2014 | 1.2 | 4 | -1.9 | 4.6 |
| % change | -10 | - | - | +21 |
Ex-div: 6 Aug Payment: 5 Sep *Includes intangible assets of £186m, or 28p a share | ||||
