Qinetiq confident despite 'difficult' year, secures £1.5bn MoD deal
By Abigail Townsend
Date: Thursday 22 May 2025
(Sharecast News) - Qinetiq posted a slide in profits on Thursday following a "difficult" year, but said it expected trading to improve, helped in part by a key defence contract worth more than £1.5bn.
The defence and security specialist, which warned on profits earlier this year, posted a 2% uplift in underlying revenues for the year to 31 March to £1.93bn.
But operating profits fell to £185.4m from £215.2m, while earnings per share were down 11.2% at 26.1p.
On a reported basis, revenues ticked just 1% higher, while operating losses, weighed down by goodwill impairments and restructuring costs, came in at £90.5m, compared to profits of £192.5m a year previously.
The firm has been rocked by tough trading conditions in key markets, including UK intelligence, as well as heightened geopolitical uncertainty.
Steve Wadey, chief executive, said: "This has been a difficult year for the group, and while we recorded modest growth in revenue and generated good cashflow, our financial performance was not what we anticipated."
However, looking to the current year, and Wadey said the group now had a clear restructuring plan in place, which would help "strengthen and capture the increasing opportunities within our key markets".
It finished the year with the order intake 12% higher at £1.95bn, a record, "and continue to see strong demand for our mission-critical capabilities", including a major contract with the Ministry of Defence.
The five-year extension to its long term partnering agreement to modernise test and evaluation services for the MoD is worth £1.54bn, Qinetiq said.
Qinetiq forecast a 3% uplift in full-year 2026 revenues and EPS growth of between 15% and 20%. The margin was forecast to be around 11%.
Wadey said: "The fundamentals of our business are strong, our priority remains on delivering value accretive organic growth."
As at 0845 BST, shares in FTSE 250 stock were trading 4% higher at 458.4p.
Jamie Murray, analyst at Shore Capital, said: "While the [LTPA] renewal was widely expected, today's announcement should ease any concerns surrounding the contract. We will make minor adjustments to our model, but our forecasts remain broadly in line with guidance and we do not expect a material uplift."
Shore Cap has a 'hold' recommendation on the stock.
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