QinetiQ Group PLC (LSE:QQ.) shares edged 2.6% higher to 453p on Thursday after the defence technology group posted interim results broadly matching guidance and reaffirmed confidence in both near-term performance and long-term growth.
For the six months to 30 September, revenue slipped 5% to £900.4 million, reflecting tough market conditions and the restructuring of its US operations, including the previously announced sale of its US Federal IT business.
Underlying operating profit fell 10% to £96 million, though the underlying margin of 10.7% came in slightly ahead of guidance. Underlying earnings per share were unchanged at 14.2p, helped by the impact of QinetiQ’s accelerated share buyback.
Order intake jumped to £2.42 billion, up from £1.03 billion a year earlier, while the funded backlog expanded to £4.35 billion. Management said this, combined with an £11 billion pipeline, provides strong long-term visibility despite softer near-term demand in the UK.
Cash generation remained robust with 85% conversion and net debt reduced to £180.9 million.
Chief executive Steve Wadey said operational delivery “has been in line with expectations”, highlighting the group’s relevance as defence budgets rise and threats evolve.
He also pointed to a £1.5 billion extension of the UK’s Long-Term Partnering Agreement for test and evaluation as a key win.
Guidance for the full year is unchanged, with QinetiQ still targeting around 3% organic revenue growth (pre-FX and excluding the disposal), an 11% margin, cash conversion of about 90% and earnings per share growth of 15–20%.
An interim dividend of 3p per share, up 7%, will be paid in February.