BRITISH defence technology firm Ultra Electronics posted a nine per cent drop in pre-tax profits yesterday as squeezes on UK and US military budgets took their toll.
Annual profits fell to £82.8m as the company spent on acquisitions to fuel its growth in a suffering defence market. The company’s underlying operating profit, which stripped out this investment, was flat year-on-year.
Ultra Electronics, whose software and hardware is used by customers including BAE Systems, Rolls-Royce and Boeing, is one of many firms that have been affected by defence budget cuts.
US politicians yesterday appeared resigned to automatic spending cuts – half of which are to the world’s biggest defence budget – while the UK has seen its biggest squeeze to defence spending for more than 20 years.
The company says that uncertainty over the US budget had already hit orders even before the scheduled cuts came in.
Ultra Electronics has reacted to these cuts by focusing on its other sectors such as transport, energy and security – although defence still makes up 56 per cent of the group revenues. Cyber-security has become an increasingly important part of the group as governments shift their focus online.
“The group continues its strategy of investment in differentiated specialist capabilities to underpin medium and long-term growth, through increased research and development and through acquisitions,” Ultra Electronics’ chief executive Rakesh Sharma said yesterday in a statement.