A mixed outcome for QinetiQ (QQ.) at the half-year mark, achieved against continuing constraints on Ministry of Defence (MoD) spending, and prior to the additional £1bn commitment outlined by the government in the recent Autumn Budget. Adjusted operating profit was flat once you disregard £6.5m in non-recurring items at the 2017 half-year, while a 9 per cent increase in organic orders should be viewed against an 8 per cent fall in the funded order backlog to £1.88bn.
So, despite the challenging backdrop, the defence contractor has continued to secure new business, including a $95m (£74m) Battlefield and Tactical Communications & Information Systems (BATCIS) contract with the MoD. The group continues to diversify its revenue streams, as shown by a $44m US robotics deal won over the first half, which means that the proportion of oversea contracts has risen to 31 per cent from 26 per cent. In the medium term, management wants this to reach 50 per cent.
Broker Barclays forecasts adjusted full-year earnings per share of 17.4p for the March 2019 year-end, down from 19.2p in FY2018.
| QINETIQ (QQ.) | ||||
| ORD PRICE: | 274p | MARKET VALUE: | £1.56bn | |
| TOUCH: | 273.9-274.2p | 12-MONTH HIGH: | 299p | LOW: 190p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 142p | NET CASH: | £249m | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 393 | 69.3 | 11.3 | 2.1 |
| 2018 | 420 | 52.7 | 8.9 | 2.1 |
| % change | +7 | -24 | -21 | - |
| Ex-div: | 10 Jan | |||
| Payment: | 8 Feb |
