Qinetiq writes off £256m from US unit and considers a sell-off

 
City A.M. Reporter
DEFENCE technology company Qinetiq could sell its US services division after a £256m writedown prompted it to launch a strategic review of the business.

Qinetiq and other defence contractors have been hurt by continuing uncertainty over the impact of mandatory US government spending cuts that have already caused some contracts to be delayed.

“We’re not ruling out anything at this moment in time,” chief executive Leo Quinn said when asked if the Qinetiq was considering selling the division, although he added that it was “far too early” to be certain.

The purpose of the strategic review of the US business, which will be carried out over the next year, is to determine the best way to maximise value, Quinn said.

Underlying operating profits at the subsidiary fell by nearly 32 per cent to £21.9m in the year to 31 March. The UK operation, meanwhile, increased operating profit by 40 per cent to £85.8m.

Sales from the US business, which provides engineering support to Nasa and the US Army, accounted for about 36 per cent of the company’s £1.33bn revenue over the period.

Shares in Qinetiq slipped 2.85 per cent to 198p yesterday.