Defence and security group Qinetiq (QQ.) said it had continued to perform in line with expectations in the final quarter of its financial year to 31 March, despite the impact from coronavirus.

Unlike many other UK firms, Qinetiq has not axed its dividend but will kick the decision down the road and make the call on its shareholder payout later in the year.

Shares in the company fell 5% to 306p.

According to Refinitiv data, analysts are expecting full-year revenues to be up 9% to £995m and flat operating profits of around £124m.

BELT TIGHTENING 

The company has initiated a temporary measure aimed at saving costs to ensure the business can continue to provide its critical services. The chief executive and financial officer are taking a 33% pay-cut and the board has agreed to a 25% reduction in fees.

The firm is looking to cut operating expenditures and defer capital expenditures to preserve cash flow.

The majority of Qinetiq’s customers are governments, signed on long-term contracts and management do not anticipate the current economic backdrop to ‘negatively impact their payment practices.’

‘Our customers face unprecedented challenges in overcoming COVID-19, while continuing to deliver critical defence and security capabilities; we play a key role in supporting them to do this,’ said chief executive Steve Wadey.

WELL-FUNDED

The balance sheet is strong with a net cash position of around £60m at the end of March as well as, an undrawn revolving credit facility of £275m, giving the company plenty of financial headroom to tackle unforeseen developments.

With a backlog of orders worth nearly £3bn, the company is well positioned for the future, but cognisant of the restrictions governments are making to tackle the pandemic and the effects it may have on revenues.

A more detailed assessment will be communicated at the full-year results presentation on 21 May.

READ MORE ABOUT QINETIQ HERE

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Issue Date: 01 Apr 2020