Defence and security company QinteiQ (QQ.) reported full-year revenues to 31 March 2021 up 19% to £1.28 billion and underlying operating profit up 14% to £151.8 million, slightly above expectations, pushing the shares up 1% to 329.6p.
The company delivered a fifth successive year of growth with underlying organic revenues up 10% and acquisitions contributing sales of £117.2 million.
Similarly, operating profit growth was boosted by full year contributions from businesses acquired in the prior year, with organic growth contributing 6%.
Orders increased 18% to £1.15 billion and at the beginning of the new financial year around £800 million of the group’s revenues were under contract compared with £850 million last year, reflecting disposals and conversion of prior backlog into revenues.
CONFIDENT OUTLOOK
QinetiQ is targeting mid-single digit organic growth in revenues with operating margins over the longer term of between 12%-to-13%.
Over the next year, margins are expected to be around 1% lower due to increased investments in the digital transformation programme. Capital expenditures are expected to be in the £90 million to £129 million a year over the next two years.
The group’s ambition is to deliver a similar level of growth over the next five years as achieved in the last five, with revenues growing 70% and operating profit up 40%. International revenues are expected to increase their share above half.
QinetiQ ended the period with net cash of £164.1 million after generating £103.1 million of free cash flow. Disposals added £54.4 million to the coffers while acquisitions consumed £28.5 million.
The board proposed a final divided per share of 4.7 pence, taking the full year dividend to 6.9 pence per share, an increase of 5%, in line with its progressive dividend policy.
QinetiQ is one of Shares’ running top stocks for 2021.
