Qinetiq warns on UK defence market uncertainty

20th Nov 2014 08:07

Defence group Qinetiq warned of uncertainty in the UK defence market and its global product division as it reported higher first-half profits but lower revenues.Qinetiq said changes in the UK budgetary environment resulting from the upcoming General Election as well as the Ministry of Defence's (MoD) transformation programme were likely to create some short-term uncertainty in the UK defence market.It said the UK Government continued to face a significant budget deficit and more fiscal austerity looked likely after the next general election in May next year."Nevertheless the division's performance as a whole is expected to remain steady this year," it added.The group also said there was a wide range of possible outcomes for the performance of global products as the division has a lumpy revenue profile dependent on the timing and shipment of key orders."Although newer products are recording notable milestones, the draw-down of American overseas military forces is expected to continue to depress demand for conflict-related products," Qinetiq said.Qinetiq, which makes James Bond-style gadgets and robots for detecting bombs, said underlying pre-tax profit rose to £46m from £42.9m a year ago on revenue of £365.6m, down from £377.4m a year ago.The group said its EMEA services division performed strongly with a 13% rise in orders, but the impact of US military cutbacks on its global product division offset that.Qinetiq said it was now pursuing more international business in markets such as Canada and Australia to build on the order momentum achieved in the 2014 financial year and offset pressure in its traditional markets of the UK and US.The group lifted its dividend per share to 1.8p from 1.4p.Chief executive Leo Quinn, who is leaving soon to take the equivalent role at construction group Balfour Beatty, said: "Despite challenging markets, the board's expectations for group performance in the current financial year are unchanged."Shares fell 0.4p or 0.2% to 205.1p at 09:13 in London.