22nd Jul 2014 08:46
LONDON (Alliance News) - QinetiQ Group PLC said Tuesday that it retains its outlook for the full-year as its Europe, Middle East and Asia Services division performed in line with expectations during the first quarter as it benefited from continuing productivity improvements.
In an interim management statement released ahead of its annual general meeting Tuesday the defence company said however that its Global Products division has been impacted by the drawdown of overseas military forces, due to the fact that it has shorter order cycles than the EMEA Services business.
"Visibility and predictability of key orders remains limited and, as previously announced, the division will incur circa USD5 million costs during H1 associated with separating from US Services infrastructure," said the company Tuesday. "Commercial products and those developed in the UK continue to record some important successes but cannot yet make up for the shortfall in sales of US conflict-related products."
The EMEA Services business has benefited from continuing productivity improvements and better project execution embedded during QinetiQ's self-help phase eighteen months ago, said the company.
The FTSE 250-listed company's Maritime business won a GBP5 million contract previously delivered by a competitor to deploy and maintain the Ministry of Defence's mobile underwater targets. QinetiQ Training, an 'Explore' business, is also part of a team that won a position on an Indefinite Delivery, Indefinite Quantity contract under which the US military procures training, education and exercise solutions and support, said the company.
The company said its outlook for the full-year to March 31, 2015 remains unchanged, "Notwithstanding the strong performance in EMEA Services last year, the MOD transformation programme is likely to create some short-term uncertainty in the UK defence market, and the division's performance as a whole is expected to remain steady this year.
Looking ahead QinetiQ said that while newer products are recording "notable milestones, the drawdown of American overseas military forces is expected to continue to depress demand for conflict-related products, and the division is unlikely to see significant benefits from the repositioning of its US operations until later in the year."
On May 22 the defence company said it swung to a small pretax profit in its last financial year as impairments halved, but its profit excluding charges fell as it continued to be hit by the drawdown in US military operations in recent conflict zones. At the time it redicted only a "steady" outlook for the EMEA Services unit due to restructuring and budget cuts at the UK's Ministry of Defence.
On May 27 the company completed the sale of its US Services division to The SI Organisation Inc for an initial consideration of USD165 million.
Shares in the FTSE 250-listed company were Tuesday trading 1.11% higher at 209.30 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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