QinetiQ reiterates guidance, warns of some market slowness
By Josh White
Date: Tuesday 21 Jan 2025
(Sharecast News) - QinetiQ Group shares were sliding on Tuesday, even after it maintained its full-year and mid-term guidance, expecting high single-digit organic revenue growth with stable underlying margins and strong cash conversion, as it cautioned of some slowness in UK services.
The FTSE 250 company said it remained on track to achieve its mid-term target of £2.4bn in organic revenue at approximately 12% margin by 2027.
Its £100m share buyback programme was set to finish in early February, after which the additional £50m buyback announced at its interim results would commence.
Revenue growth in the EMEA services division reportedly remained strong, supported by a stable medium-term outlook and a robust pipeline of major programmes.
However, short-term order intake in the UK had been slower than anticipated due to financial conditions, prompting the company to adjust certain capabilities within its UK intelligence business.
In contrast, the UK defence business, which benefits from longer-term contracts, continued to perform well.
Global solutions had meanwhile maintained stable revenue despite challenges in the US contracting environment.
The company noted its appointment of Tom Vecchiolla as the new leader of its US business, following the departure of Shawn Purvis.
Vecchiolla, formerly president of Raytheon International and chief executive officer of ST Engineering North America, would bring extensive experience to the role, the board said.
Order intake for the year stood at £1.3bn, consistent with the prior year.
Key achievements during the quarter included the opening of a forward operating base in Huntsville, Alabama, to support the US Army Aerial Target Systems 3 contract, and the provision of high-value test and evaluation services to facilitate the rapid deployment of the British Army's new Archer self-propelled howitzer.
In addition, QinetiQ said it secured a strategic five-year engineering services contract in Australia valued at more than $50m.
The company said it remained well-positioned to capitalise on increasing defence spending in its core markets, with capabilities aligned to evolving security threats.
"Our expectations for the full year remain unchanged, thanks to the hard work of our talented people who have continued to focus on consistent operational delivery across the group," said chief executive officer Steve Wadey.
"I am confident that QinetiQ remains well positioned to deliver long-term growth and value creation for shareholders, with highly relevant and differentiated capabilities, an established presence across key growth markets and an orders pipeline worth over £11bn giving us significant long-term visibility."
At 0940 GMT, shares in QinetiQ Group were down 11.6% at 371.8p.
Reporting by Josh White for Sharecast.com.
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