BAE shows strong results for first half of 2008

Published 1 December 2008

Large defense and security contractor reports rise in revenue in first half of 2008 to £727.4 million from £638.8 million a year earlier, with underlying operating profit up 19.8 percent to £55.1 million

The recent financial crisis notwithstanding, global defense and security technology group Qinetiq is reporting strong interim results driven by a robust performance in North America. The first half of the year saw revenue rise to £727.4 million from £638.8 million a year earlier, with underlying operating profit up 19.8 percent to £55.1 million. This was supported by a 31.4 percent increase in order intake, which included a 15-year £150 million maritime contract from the U.K. Ministry of Defense.

Revenue in the Europe, Middle East, and Asia (EMEA) region edged up 4.5 percent to £397.3 million from £380.1 million. Underlying operating margins increased to 7.3 percent following EMEA reorganization.

North American operations reported strong growth with a 27.3 percent increase in revenue, 18.9 percent of which came from organic growth. The region’s results were enhanced by acquisitions made in the last financial year, which have extended the group’s presence in the high-end intelligence product and services market. In the United Kingdom, Qinetiq has seen a tightening of its research budget following the economic slowdown. The group has repositioned its technology business as a response and says that it will monitor the U.K. defense market in the second half to assess changing priorities.

Graham Love, chief executive officer of Qinetiq, said: “There remains a strong pipeline of acquisition opportunities and we will be selective in pursuing those that complement and grow our capabilities and provide access to new markets. We plan to undertake the disposal of certain non-core assets, which will enable us to re-allocate capital into quality investments while retaining a resilient balance sheet. With the good growth experienced in the first half and a solid order backlog, the board is announcing a 12.8 per cent increase in the interim dividend and looks forward to the remainder of the year with confidence.”