QinetiQ Group plc, the defence, security and aerospace company, today issues an Interim Management Statement covering the period from 31 March 2014 to date, prior to holding its Annual General Meeting at the Pennyhill Park Hotel, London Road, Bagshot, Surrey, GU19 5EU at 11am today.
The EMEA Services division performed in line with expectations during the first quarter. Utilisation levels remain high, particularly in the Weapons and Maritime businesses. In addition the division is benefitting from continuing productivity improvements and better project execution embedded during QinetiQ’s self-help phase eighteen months ago. The Maritime business won a £5m contract previously delivered by a competitor to deploy and maintain the MOD’s mobile underwater targets. QinetiQ Training, an ‘Explore’ business, is also part of a team that won a position on an Indefinite Delivery, Indefinite Quantity contract under which the US military procures training, education and exercise solutions and support.
The Global Products division has shorter order cycles than EMEA Services and continues to be impacted by the drawdown of overseas US military forces. Visibility and predictability of key orders remains limited and, as previously announced, the division will incur circa $5m costs during H1 associated with separating from US Services infrastructure. A new Proxy Board and Chairman have been appointed to assist management in repositioning US Global Products and addressing its performance, with careful management of its cost base. Commercial products and those developed in the UK continue to record some important successes but cannot yet make up for the shortfall in sales of US conflict-related products.
Cash generation during the first quarter remained strong.
The sale of US Services closed on 27 May 2014. On completion, the Group paid £6m into its pension scheme and, at the end of June, paid down its remaining $248m private placement debt.
The Group has commenced the previously announced £150m share buyback and at 18 July 2014 had bought back 10m shares at a cost of £21m.
The outlook for the full year to 31 March 2015 is unchanged from that set out in the preliminary results on 22 May 2014.
Notwithstanding the strong performance in EMEA Services last year, the MOD transformation programme is likely to create some short-term uncertainty in the UK defence market, and the division’s performance as a whole is expected to remain steady this year.
At the same time there is a wide range of possible outcomes for the performance of Global Products as the division has a lumpy revenue profile which is dependent on the timing and shipment of key orders. Although newer products are recording notable milestones, the drawdown of American overseas military forces is expected to continue to depress demand for conflict-related products, and the division is unlikely to see significant benefits from the repositioning of its US operations until later in the year.
Notes for Editors:
A FTSE250 company, QinetiQ uses its world class knowledge, research and innovation to provide high-end technical expertise and advice, to customers in the global aerospace, defence and security markets. QinetiQ's unique position enables it to be a trusted partner to government organisations, predominantly in the UK and the US, including defence departments as well as other international customers in targeted sectors.
||David Bishop, QinetiQ
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||QinetiQ press office
||+44 (0) 1252 393500|
||Liz Morley, Maitland
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