Qinetiq to take £140m impairment charge as tough markets persist

(Sharecast News) - UK defence contractor QinetiQ on Monday said it would take a £140m impairment charge as tough market conditions persisted into the fourth quarter, hitting work in its UK intelligence and US sectors and resulting in further delays to a number of contract awards. It added that it had also identified a number of one-off, largely non-cash charges and provisions primarily relating to inventory and cost recovery in legacy US operations. Around £25-30m is included in updated underlying profit guidance for the year end and around £35-40m would be reported through exceptional items.

The update comes amid plans by the UK government to boost defence spending in response to the US administration's pivot towards Russia. Despite the balance sheet charges, Qinetiq said it would extend its share buyback by up to £200m.

"In addition, recent geopolitical uncertainty has impacted our usual fourth quarter weighting to higher margin product sales from the US," the company said in a trading statement.

Qinetiq said organic revenue growth for fiscal 2025 would be 2% at an underlying margin of 10%.

"Longer term, the underlying strength of the group coupled with the relevance of our mission critical capabilities to the national security needs of our customers in the UK, US and Australia as well as NATO allies, positions us well for long term future growth," Qinetiq said.

"Within the evolving threat environment our customers' spending priorities, which are well matched to our capabilities, have been boosted by commitments to increased spending in the UK and Europe."

Reporting by Frank Prenesti for Sharecast.com