QinetiQ’s cost cutting helps boost results

DEFENCE firm QinetiQ saw its shares soar yesterday after it posted a 14 per cent rise in first-half profit on stronger sales and better cash generation.

Sales at the defence technology firm’s global products business, which accounts for around a third of group revenue, grew 65 per cent, driven by demand for its Q-NET vehicle products to support operations in Afghanistan.

QinetiQ reported underlying pre-tax profit of £51.6m for the six months to the end of September, on revenue seven per cent higher at £865m.

Its shares, which had fallen more than a third this year after it lost a key Ministry of Defence training contract, closed up 13.6 per cent at 112.5p, valuing the floated portion of the firm at £647.5m.

“The overall beat comes from the lumpy products business, mainly from the Q-Nets order which the market had underestimated,” Bank of America analyst Celine Fornaro said in a research note, adding the company’s 231 per cent cash conversion rate was a “key positive”.

QinetiQ, which was spun off from the Ministry of Defence in 2001, said it had cut net debt a quarter to £327m over the past 12 months, adding cost cuts and self-help measures were starting to bear fruit.