Shares in Qinetiq (QQ.) clicked into reverse after the defence contractor announced that new orders were slower than expected in the first quarter. Management revealed that revenue was broadly flat in its Europe, Middle East and Asia (EMEA) services division, but that some customer contract award decisions were deferred or delayed. Nevertheless, it expects the division to deliver modest revenue growth in the year to March 2018, but warned that the issue of lower baseline profit rates for single-source contracts persists, representing “a headwind for operating margins”.
Revenue in the global products arm was also flat, but is expected to grow through the accounting year – helped along by a full-year contribution from the drone targets business acquired from rival Meggitt (MGGT) in late 2016.