QinetiQ Group plc Second Quarter Trading Update
Maintaining full year guidance – continuing to deliver for our customers
We have delivered strong and consistent operational performance in the second quarter. Order intake continues to remain excellent with first half orders at c. £800m, 18% higher than the first half of FY22, good organic revenue growth, profit in-line with our expectations and strong cash conversion. With more than 90% of our FY23 revenue under contract we remain confident to deliver in-line with our expectations for the full year, despite the challenging macro-economic environment.
In the second quarter EMEA Services has continued to win significant new orders and deliver strong organic revenue growth. We have won a number of important new long-term contracts, including a £32m 3-year contract with UK MOD for the Future Combat Air System (FCAS) programme through the Engineering Delivery Partner framework, a £26m uplift to the LTPA contract to reflect inflationary effects in the UK, a 5-year contract extension with Boeing for our 5 metre wind tunnel services and contracts totalling A$77m in Australia through growth of the Managed Services Provider (MSP) programme.
In the second quarter we have delivered good performance across Global Products. Specifically, US performance has been strong with orders, revenue and profit in the first half of FY23 above the second half of FY22. We have continued to win and deliver for our customers, including winning a 5-year contract worth up to $45m to provide services for the Development Command C4ISR at the Fort Belvoir Prototyping Integration Facility and a multi-year research, development and technology integration contract, worth up to $49m, with the US Army for imaging services. QinetiQ Target Systems has also continued to deliver well, including a number of notable wins and deliveries for customer training exercises in Europe.
We have delivered a number of strategic milestones in the second quarter of FY23, most significantly our announcement in August to acquire Avantus Federal in the US for $590m – regulatory approvals are underway and we remain on-track to complete the acquisition by the end of calendar year 2022. We have also recently announced the agreement to acquire Air Affairs (Australia) Pty Ltd in Australia for A$53m and the agreement to sell QinetiQ Space NV in Belgium to Redwire Space Europe for €32m. All three transactions demonstrate disciplined execution of our strategy and capital allocation policy – focusing our capital deployment into strategically-aligned businesses to support and drive our long-term growth in our six distinctive offerings in our three home countries, the UK, US and Australia, as we continue to build an integrated global defence and security company, delivering good shareholder returns.
Steve Wadey, Group Chief Executive Officer said:
“Against an uncertain and evolving economic backdrop, I am delighted that we have delivered strong and consistent operational performance in the first half of the year. We remain focused on disciplined execution of our strategy to build an integrated global defence and security company, delivering high-value solutions for our customers. Our strategy to perform and grow continues to build momentum across the Group, demonstrated by excellent order intake, good organic revenue growth, profit in-line with our expectations and three strategic transactions in the first half of the year.”
FY23 Interim Results
QinetiQ will publish its full Interim Results on Thursday 10th November 2022. We will be hosting an in-person results presentation at 09:30 BST at the London Stock Exchange, 10 Paternoster Square, London, EC4M 7LS. Registration to join in-person or via the live webcast is available here: https://www.qinetiq.com/en/investors
For further information please contact:
John Haworth, Group Head of Investor Relations: +44 (0) 7920 545841
Lorna Cobbett, Citigate Dewe Rogerson (Media enquiries): +44 (0) 7771 344781