Shares in defence and security company QinetiQ (QQ.) gained 9% to 317p after the company delivered first-half revenues and profit ahead of expectations and increased full-year guidance.
INCREASED GUIDANCE
Despite Covid-19 related disruptions earlier in the year QinetiQ said it was on track to report a fifth consecutive year of organic growth.
After reinstating full-year guidance on 30 September indicating results would be ahead of expectations, a strong second quarter performance has prompted management to again increase guidance.
The company expects to deliver low double-digit revenue growth including acquisitions with operating margins consistent with the first-half and resulting in full-year results being ‘modestly ahead’ of current consensus. Longer-term operating margin guidance remains in the 12%-to-13% range.
According to QinetiQ consensus full-year revenues to 31 March 2021 are currently £1.146 billion while operating profit is expected to be £130 million.
Broker Numis today increased its estimates saying, ‘an excellent set of results from QinetiQ with H1 EBITA significantly ahead of our expectations.
‘We increase our full year estimates again and are now almost back to our pre-Covid-19 estimates.’
GOOD REVENUE VISIBILITY
The company had an order backlog of £3.1 billion at the period end and it started the second-half with around £575 million of revenues under contract, up 27% on the same time last year.
During the first-half to 30 September revenues grew 8% organically and 24% including acquisitions to reach £603 million. This implies full-year revenues of £1.178 billion which is around 3% higher than consensus.
Underlying operating profit increased 16% to £69 million driven by a £8.7 million contribution from MTEQ, the advanced sensory solutions business acquired in December 2019 and training specialist NSC acquired in February 2020.
There was also a small contribution from Naimuri, the specialist software and data analytics firm acquired in July 220. Excluding these effects operating profits were flat.
FINAL DIVIDEND REINSTATED
After strong cash performance in the first-half with underlying net cash flows from operations up 20% to £92.7 million the company will now pay the previously deferred 4.4p per share final dividend for the year ended 31 March 2020 on 16 November. This takes the total dividend to 6.6p per share, in-line with the prior year.
The company had net cash of £112.7 million at the period end compared with £84.7 million at 31 March 2020.
