Qinetiq copes well in spite of defence cuts

Marion Dakers
DEFENCE tech group Qinetiq said its first half performance had been strong, in spite of cuts to government spending in the UK and US.

The firm yesterday posted a seven per cent drop in revenue for the six months to the end of September to £685.5m.

Underlying pre-tax profit rose 21 per cent to £85.8m. On a statutory basis, profit before tax rose 9.1 per cent to £80m.

While “visibility remains very limited” while the world’s biggest economy takes an axe to its defence spending, Qinetiq thinks it will meet expectations for the year.

Revenues in the States tumbled by 10 per cent to £241.6m in the period.

Qinetiq’s UK services arm, which offers cybersecurity, training and testing to the Ministry of Defence and security agencies, posted broadly flat revenues of £289.6m. Cost savings helped boost the unit’s operating margin from 9.6 to 13.2 per cent.

The group had £21.5m net cash on its balance sheet at the end of the period – up from a net debt of £145.3m a year ago, when the firm was in the midst of a restructuring.

This figure was boosted by a one-off payment of £65m from the MoD to tidy up historic liabilities.

Shares in the FTSE 250-listed company have risen over 40 per cent since the start of the year, and closed up 0.41 per cent at 196.5p yesterday.