US defence cuts hit Qinetiq but other businesses picks up

22nd May 2014 08:08

US defence budget cuts hit annual profits at Qinetiq, but the defence group said its non-US activities were picking up.Qinetiq, which makes James Bond-style gadgets such as bomb-defusing robots for military and commercial uses, blamed the US pullout from war-zones such as Afghanistan for a 21% fall in underlying operating profit to £132.7m in the year to March 31st.The group's global product division faced a drop in US conflicted-related sales against a strong prior year.Qinetiq also said continued uncertainty in the US federal services market hit the performance of its US services business.However, the company has agreed to sell US services for $165m plus a potential earnout of up to $50m.It also said its Europe, Middle East and Africa (EMEA) services division had organic growth for the first time in five years, increasing revenue by 3% on an organic basis at constant currency.It made a pre-tax profit of £4.1m against a £137m loss last time. Including specific adjusting items such as a non-cash impairment of £41.9m to acquired goodwill in the US global products arm, statutory post-tax losses were £12.7m against a loss of £133.2m last time.The full year dividend rose to 4.6p from 3.8p a year ago.Chief Executive Leo Quinn said: "The sale of US Services is a key milestone in the group's transformation. "From this foundation, our people are working hard across QinetiQ to achieve our growth strategy."Shares rose 1.7p to 200.7p at 08:47 in London.PW