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Wednesday, February 28, 2024

Qinetiq hopeful despite cut fears

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Defence technology firm Qinetiq has stuck by its forecast for full-year profits despite ongoing fears over the impact of government spending cuts.

The group, which has around 6,000 workers in the UK, is facing a major spending clampdown by one of its biggest clients, the Ministry of Defence.

It said its own self-help plan was helping to refocus the business and cut debt, but added that it was too early to assess the full impact of defence spending reviews in the United States and the UK.

The group, which supplies technology such as Talon robots used for bomb disposal, posted pre-tax profits of £51.6 million in the six months to September 3, up from £45.1 million a year earlier after a 6% rise in revenues.

Shares jumped 10% after the better-than-expected update, despite costs relating to an ongoing redundancy and restructuring programme resulting in bottom-line losses of £37.6 million.

Chief executive Leo Quinn said net debt fell to £327 million from £452.3 million a year ago in a yardstick of the company’s rebuilding efforts.

He added: “Our goal is to become more competitive and to use our deep relationships with customers to help them find solutions to the challenges they face.”

While the early retirement of the Harrier fleet and cancellation of the Nimrod MRA4 will have an impact on UK services revenues, Qinetiq said the Government’s plans to invest in cyber security were a positive for the group.

It added: “Reductions in MoD and agency personnel provide an opportunity for Qinetiq, as a trusted adviser, to demonstrate how more can be delivered by spending less.”

In the US, Qinetiq described the trading environment as challenging, but said the markets in which it is well placed, such as IT, cyber security and logistics, remained attractive.

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