Ultra Electronics first-half profit hit by cost overruns

6th Aug 2018 07:18

(Sharecast News) - Ultra Electronics posted a drop in first-half profit on Monday as it took a hit from cost overruns on certain development contracts.In the six months to 30 June, underlying pre-tax profit fell to £43.6m from £52.3m, while statutory pre-tax profit declined to £20m from £30.9m as revenue dropped 4.2% to £350.5m. However, the order book rose to £969.2m from £807.8m.Ultra noted that the average US dollar rate during the period was $1.38 compared to $1.26 in the first half of last year, with the strengthening of the pound resulting in a negative foreign exchange translation impact of 5.5%.The company said the majority of its operations had better-than-expected order intake during the period, reflecting an improvement in its major market. As previously disclosed, cost overruns on specific development contracts impacted the reported results, but overall, the group performed broadly in line with management's expectations.Chief executive officer Simon Pryce said: "Although I have only been here a short time, it is clear that the Group has a strong and relevant technology base and a range of specialist capabilities supporting a broad number of long term platforms and programmes."We enter the second half with a strong order book and remain focused on execution and delivery while continuing to win new business. The group is well positioned in areas of priority spend with significant exposure to the strengthening US defence budget. We will also be looking at the potential for greater connectivity, operational improvement and further targeted investment in core technology, processes and people. Management's expectations for 2018 are unchanged from our recent pre-close trading statement."