- Sales and earnings above consensus
- 2025 guidance raised
- Medium-term goals maintained
Shares in QinetiQ (QQ.) jumped 12% to a new all-time high of 424p after the defence group delivered better than expected full year profit and raised guidance for the financial year to 31 March 2025.
The shares topped the FTSE 250 gainers taking gains close to 40% over the last five years, comfortably outperforming the 8% return of the mid-cap index over the same period.
STRONG PERFORMANCE AND OUTLOOK
Revenue jumped 21% to £1.9 billion, driven by good performance in EMEA (Europe, Middle East and Africa) services and operating profit was up 20% to £215 million, equating to a margin on sales of 11.3%, up 16% on an organic basis.
Underlying earnings per share grew 11% to 29.4p, representing a 7% beat against consensus analysts’ forecasts. The full year dividend per share was hiked by 7% to 8.25p and the company announced a £100 million share buyback in January 2024.
Chief executive Steve Wadey said he was pleased with the strong financial performance against a backdrop of difficult conditions in the US.
Wadey commented: ‘We enter this year with strong momentum and increasing spending in our major markets, which gives us confidence to increase our guidance for FY25 and underpins our FY27 outlook of circa £2.4 billion organic revenue at a circa 12% margin.
‘With a strengthened balance sheet and enhanced focus on disciplined capital allocation, we are well positioned and have a clear strategy with optionality for additional investment in sustainable growth and further shareholder returns.’
Guidance for the current financial year has been increased to high single digit organic revenue growth at a stable profit margin.
The company noted that achieving its 2027 target will deliver an ‘attractive’ return on capital employed at the upper end of a 15% to 20% range. Cash conversion is expected to remain ‘high’ above 90%.
EXPERT VIEW
Analyst Jamie Murray at Shore Capital noted earnings were ahead of his forecast and consequently he expects to raise his 2025 revenue forecast by mid-single digits and operating earnings by low single digits.
‘Whilst this is positive news, we would like to see margin progression towards the top end of the medium-term target range, which stands at 11% to 12%, rather than languishing at the bottom end,’ added Murray.
