DECLINING military spending is forcing QinetiQ, the former research arm of the Ministry of Defence, to seek out more civilian customers for products such as fibre-optic cables that detect disturbances in oil fields.
The technology firm expects commercial contracts to make up half of its business in the next five years, up from a quarter at present, boss Leo Quinn said.
Shares in QinetiQ soared over seven per cent yesterday as the company said earnings for the year to the end of March 2014 would hold no negative surprises and reported net cash of £120.5m, which analysts said was stronger than expected.
Underlying pre-tax profit for the half-year fell to £52.3m from £85.8m in the same period last year, while revenue fell to £599.6m.
QinetiQ’s military equipment unit has been hit hard by delays and uncertainty caused by budget cuts in Britain and the US.
“At the end of the day, let’s face it, this is the toughest defence market in 20 years. To grow in this market is extremely challenging,” Quinn told Reuters. “Our strategy really defines a growth portfolio beyond defence. In an ideal world, if you were prepared to take a horizon in the next five years, I would see that ratio moving more towards 50-50.”
City A.M. Reporter