QinetiQ announced that its projected results for FY23 are anticipated to exceed both its prior guidance and the upper limit of market consensus expectations.
A leading defence company specialising in creating and testing new technologies, QinetiQ released a trading update on 17 April for the fourth quarter of the fiscal year ending on 31 March 2023.
The company has reported an impressive fourth quarter, resulting in a record-high full-year order intake exceeding £1.7bn, indicating a sustained high demand for their products.
The company anticipates a significant increase in total revenue growth, estimated to be in the high-teens percentage range while maintaining stable margins.
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The projected underlying operating profit is expected to be no less than £175m, inclusive of the recent acquisition of Avantus and of Air Affairs. It should be noted that these figures are subject to audit. The company has reported impressive results in terms of orders, revenue, and profits.
Furthermore, its cash flow management has remained consistently strong, and it has successfully reduced leverage to below 1x, ahead of its original guidance by 12 months.
The company’s global product line has reported strong performance, with notable success in its US operations. The company has achieved a high order intake of $280m and impressive revenue growth of 25%, prior to the benefit of Avantus.
The company emphasised the significance of securing two key contracts with the US: the first is a $93m sole-source indefinite-delivery indefinite-quantity (IDIQ) Digital Night Vision Technology contract, which will span over four years; the second contract is worth approximately $20m and will support the US Army Robotic Combat Vehicle Light (RCV-L) experimentation.
Following the acquisition of Avantus in November 2022, the company has reported strong performance, with two successful re-competes and selection for an $80m multi-year contract with an undisclosed national intelligence customer. During the initial four months of ownership, QinetiQ reported that new business awards were lower than anticipated, but the company was able to deliver $100m in revenues at the expected margin of 10.8%.
QinetiQ made note of the recent renewal of the Maritime Strategic Capability Agreement (MSCA) in the UK, worth £259m over a ten-year period. The agreement has been signed with the Submarine Delivery Agency and is aimed at providing essential sovereign capabilities to ensure the safety and security of the Royal Navy’s surface and subsurface fleet, including the country’s continuous at-sea deterrent.
The UK Ministry of Defence has also awarded QinetiQ with a ten-year mission data contract worth £80m, known as SOCIETAS. The company’s role is to provide expertise, training, and support to accelerate and transform mission data production.
QinetiQ’s Australian branch has secured a lucrative A$13m contract to produce a high-energy defensive laser weapon system prototype. The three-year deal aims to establish an independent in-country high-energy laser manufacturing capability for Australia.
The integration of Air Affairs is reportedly proceeding according to plan, with performance remaining consistent with expectations.
QinetiQ Group chief executive officer Steve Wadey said: “Our distinctive offerings remain in high demand, demonstrating we are well placed to respond to our customers’ long-term needs driven by world events and the importance of a technologically advanced defence industry to the national security interests of our three home countries.”