QinetiQ shoots higher as results impress

The defence technology contractor ended its fiscal year with a record £3.1bn order backlog, strengthened by five major long-term contract wins

Qinetiq said its new deal with the UK Ministry of Defence was a key achievement

Defence technology provider QinetiQ Group PLC (QQ.) discharged final results on Thursday that were slightly ahead of analyst forecasts, together with a record £3.1bn order backlog.

The FTSE 250-listed group reported revenue of £911.1mln for the year to 31 March, up 9% year on year or 8% on an organic basis, helped by particularly strong growth in its Global Products division.

READ: QinetiQ bags £1.3bn revenue boost from amended partnership with UK MoD

Orders were up 32% in the year, which ended with a record £3.1bn funded order backlog, strengthened by five major long-term programme wins during the year in the UK, US and Canada.

Statutory operating profit tumbled 19% to £113.8mln but thanks to organic growth offsetting a profit headwind from UK single-source regulations, underlying operating profit inched up 1% to £123.9mln. 

Earnings per share edged up 5.1% to 19.7p and the total dividend was nudged 5% higher to 6.6p per share, as flat cash inflow of £126.3mln left £188.5mln resting in the bank at year end.

“By improving our customer focus and competitiveness, we have delivered a third successive year of revenue growth, increased our international revenue share from 21% to 30% over the last three years, offset the UK single source profit headwind and delivered organic profit growth,” said chief executive Steve Wadey.

He hailed the "significant strategic achievements" over the year that he expects will underpin sustainable profitable growth in the years ahead, most notably the amendment to the long-term partnering agreement (LTPA) with the UK Ministry of Defence, QinetiQ’s largest single contract and the foundation for many of the capabilities it offers.

Analysts at BoA Merrill Lynch said the results looked strong across board, with the numbers beating consensus forecasts for underlying profit of £115.1mln on revenue of £877.5mln.

Those at JPMorgan Cazenove were similarly impressed and raised their share price target for QinetiQ to 300p from 270p.

QinetiQ's shares were propelled almost 3% higher to 305.36p on Thursday morning. 

Quick facts: QinetiQ

Price: 321 GBX

Market: LSE
Market Cap: £1.84 billion

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