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Trading statements

QinetiQ says trading environment remains 'dynamic'

19 July 2017 07:31

QinetiQ said the trading environment remained dynamic, particularly in the UK following the recent General Election, and presented both opportunities and challenges in the period since 31 March 2017.

QinetiQ has the inherent capabilities and strategy to thrive in this environment despite some near-term unpredictability of order intake.

EMEA SERVICES

In the EMEA Services division, first quarter revenue under contract is similar to the position a year ago but orders were slower than expected with some customer contract award decisions deferred or delayed.

Despite the somewhat slower start to the year for orders, we continue to expect the division to deliver modest revenue growth in FY18.

The lower baseline profit rate for single source contracts continues to represent a headwind for operating margins, as previously advised.

GLOBAL PRODUCTS

The Global Products division has shorter order cycles than EMEA Services and its performance is dependent on the timing and shipment of key orders.

Revenue performance in Global Products during the first quarter was similar to the prior year and we expect the division to grow in FY18 as a result of its contracted orders and pipeline of opportunities, as well as the anticipated full year contribution from the Target Systems acquisition.

BALANCE SHEET

As outlined at our preliminary results, we are investing in our key contracts and their associated facilities.

FY18 cash flow will reflect this increased investment, with capex of £80m - £100m to support the amendment to the Long Term Partnering Agreement announced in December 2016.

OUTLOOK

We continue to make good progress delivering our strategy, embedding the cultural changes needed to improve customer focus and deliver our long-term growth aspirations.

Consequently, we are reaffirming the previous outlook outlined at our preliminary results dated 25 May 2017 and expect steady progress in FY18, excluding the non-recurring benefits in FY17, supported by revenue growth and consistent with our strategy.

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Related Company: QQ.

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