Ultra Electronics Holdings PLC (LON:ULE) has won two contracts worth a combined £25.6mln just two weeks after the UK defence company issued a profit warning and announced the departure of its chief executive.
The company’s communication and integrated systems business has been awarded a contract in the UK valued at £16.6mln to provide advanced surveillance capabilities to an undisclosed customer until 2019.
READ: Ultra Electronics shares drop as it blames US budget and UK general election for first half revenue decline
The precision control business has secured a £9mln contract to supply its HiPPAG airborne compressor system to Swedish defence and security company Saab.
The airborne compressor, which provides high pressure air to cool the infrared seekers of an aircraft’s missiles, will be used for the new Gripen fighter jet.
Saab has been awarded contracts to supply the aircraft to Swedish and Brazilian air forces.
"We are pleased to have received these significant contracts which demonstrate our wide portfolio of capabilities and our world-leading technology,” said Ultra executive chairman Douglas Caster.
"These contracts underpin the long-term success of the group and highlight Ultra's ability to work closely with both government and industry.”
READ: Ultra Electronics in deal to buy Sparton, strengthening links with US Navy
The announcement comes after the group said earlier in November that full year revenues and profits would be lower than in the previous year due to “mounting” funding pressures in the UK’s defence budget as the Ministry of Defence delays and cancels numerous programmes. Rakesh Sharma stepped down as chief executive after 28 years at the company.
"Following the profit warning and departure of the CEO two weeks ago, many fear more trouble ahead," said Liberum analyst Ben Bourne.
"However, this statement highlights the company does possess attractive technology in growing areas of the market. Shares are trading on a CY18 EV/EBIT of 9x and P/E of 11x, with a 4% dividend per share yield and 7% free cash flow yield."