Technology-based services and solutions provider QinetiQ Group Plc (QQ.L) Friday, in its trading update for the period since September 30, said it expects performance for the second half of the year to be broadly similar to that of the first-half period, as certain orders are not to be realised in the current year. The company also said its Chairman John Chisholm will be retiring from the board and named Mark Elliott as successor. QinetiQ shares are currently trading down more than 12% on the LSE.
In its interim results announcement made in November 2009, the board stated that both QinetiQ's main geographic markets have been experiencing short-term uncertainties in specific areas. The company noted that these conditions have not improved and delays have been experienced in orders from government customers in both UK and the US, in the seven weeks since that time.
Presently, QinetiQ said it believes that normal trading pattern of a seasonally stronger second half performance will not occur in the current financial year and hence the second half is not expected to exceed the first half. As a result, for the second half, the company sees its performance to be broadly similar to that of the first half.
In QinetiQ North America, QinetiQ does not expect second-half performance to exceed the first half, reflecting the US Administration's policy for campaign in Afghanistan. The company stated that the policy announcement has not yet clarified the position regarding certain orders for survivability products and unmanned ground vehicles within technology solutions which have been pending throughout the year. At this stage, the board said it does not expect these orders to be realised during the current financial year.
QinetiQ stated that UK political and economic factors delaying letting of orders have remained largely unchanged, and added that it anticipates that Europe, the Middle East and Africa, or EMEA, will not experience its traditionally stronger second half performance this year.
For the first six months of 2009, QinetiQ reported an attributable profit of GBP 0.8 million or 0.1 pence per share as compared with GBP 28.2 million or 4.3 pence per share in the corresponding period last year. Underlying profit edged up to GBP 36.9 million or 5.7 pence per share from GBP 36.5 million or 5.6 pence per share a year earlier.
The company's first half revenues rose 11% to GBP 806.3 million from GBP 727.4 million in the year-ago period. On a constant currency basis, organic revenue dipped 1% from the past year. Strengthening of the US dollar augmented revenues by GBP 69 million, QinetiQ noted.
Further, QinetiQ said Leo Quinn is undertaking a review of QinetiQ's operations and processes, and the output is expected to be reported in the preliminary results announcement in May.
At December 31, 2009, QinetiQ's net debt closed at GBP 509 million, up from the half year level due to the impact of cash restructuring, payment of GBP 12 million deferred consideration for DTRI acquisition in the prior year and other outflows. The company said it remains well within its banking covenants, at the estimated level of trading performance for the year.
Separately, QinetiQ said its Chairman John Chisholm will be retiring from the board, effective February 28, 2010. As anticipated Mark Elliott, who joined QinetiQ board in May 2009 as an independent non-executive director, will succeed Chisholm, with effect from March 1, 2010.
QQ is currently trading on the London Stock Exchange at 142.40 pence per share down 20.50 pence or 12.58% on a volume of 4.92 million shares. In the past 52-week period, the shares have been trading in a range of 123.00 pence to 179.10 pence.
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