17th Mar 2025 09:27
(Alliance News) - QinetiQ Group PLC on Monday warned persistent tough near-term trading conditions and delays to a number of contract awards will mean sales will fall short of expectations.
In response, shares in the Hampshire, England-based multinational defence technology company plunged 21% to 413.60 pence each in London on Monday.
QinetiQ expects organic revenue growth for the financial year ending March to be around 2% at an underlying margin of 10%, including GBP25 to GBP30 million of one-off in year charges.
In January, the firm said it expected high single digit organic revenue growth for the full-year.
In the year to March 2024, QinetiQ reported organic sales growth of 14%.
For the year to March 2026, QinetiQ projects revenue growth of 3% to 5% at margins of 11% to 12%.
"Tough" near-term trading conditions seen in the third quarter have persisted which has affected short cycle work in UK Intelligence and US sectors resulting in further delays to a number of contract awards, the firm said.
These two areas represent around 50% of group revenue. Trading in UK defence, which represents the other 50% of group revenue and has greater exposure to longer duration contracts, has remained strong.
In addition, QinetiQ said recent geopolitical uncertainty has impacted the usual fourth quarter weighting to higher margin product sales from the US.
Cash conversion continues to be good and the company expects net debt to be in line with last year.
But QinetiQ expects to take a goodwill impairment charge of around GBP140 million at year end due to the market backdrop and operational performance in the US.
In addition, it sees a number of one-off exceptional, largely non-cash charges of around GBP35 million to GBP40 million predominantly in legacy US operations.
In addition to the trading update, QinetiQ said it is extending its current share buyback programme of up to GBP200 million.
It expects this to take place over two years once the current GBP50 million tranche of the on-going programme has been completed at the end of May.
By Jeremy Cutler, Alliance News reporter
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