REG - QinetiQ Group plc - First Quarter Trading Update

QinetiqAnnouncement

21/07/2022 07:00

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RNS Number : 2149T  QinetiQ Group plc  21 July 2022

News release

QinetiQ Group plc

First Quarter Trading Update

21 July 2022 - QinetiQ Group plc ("QinetiQ" or "the Group") today issues a
trading update covering its first quarter of trading.

Strong first quarter performance

Building on the second half momentum of FY22, we have made a good start to
FY23 with strong group operational performance. Order intake has continued to
remain strong and revenue, profit and cash are in-line with expectations. Our
visibility on revenue under contract for FY23 has increased to £1.05bn, up
from £900m at April 2022. Consequently, we remain confident of delivering
in-line with our expectations, with mid-single digit organic revenue growth
and operating profit towards the mid-point of our 11% to 12% short-term
operating profit margin target, rising to 12% to 13% operating profit margin
in the medium term.

Recent world events have reinforced the long-term needs of our customers,
including capabilities utilising differentiated technology, alongside test and
training solutions that are directly aligned with our strategy. In all of the
markets in which we operate globally Governments are seeking to enhance their
defence and security stance against the evolving future threats, with rising
defence spending in all of our three home countries: UK, US and Australia.
More significantly still, our six distinctive offerings are well aligned with
segments of the defence budgets that are priorities to combat future threats.

We have seen a strong start to the year in EMEA Services and continued good
progress in the US and other areas of Global Products. Overall, the Group is
showing continued growth and profitability in-line with our expectations, both
in the short and medium term.

Strategy Update

Our strategy to build an integrated global defence and security company with
revenues of more than £2.3bn is continuing to deliver. Building on our
successful six year track record of growth, we are continuing to deliver for
our customers and on our promises. We remain focussed on our six distinctive
offerings, with a particular focus on growth in the UK, US and Australia. We
remain active in driving both strong organic growth as well as executing on
our inorganic growth strategy. In the first quarter, we achieved a number of
successes that demonstrate our delivery on strategic objectives:

 ●    SPUR robot deliveries - our US business has achieved a major production
      milestone with the completion of the Low-Rate Production (LRIP) contract of
      the Common Robotic System Individual (CRS-I) for the US Army. We are also
      progressing with our production ramp-up for the $64m Full-Rate Production
      (FRP) contract which we won last year; the largest Program of Record for US
      Robotics for the delivery of a further 1,200 SPUR robots.
 ●    Bradley electric drive - in August 2020, we announced our joint win with BAE
      Systems in the US where we successfully bid into the Rapid Capabilities and
      Critical Technologies Office (RCCTO) to integrate our E-X-Drive hybrid
      propulsion system into their Bradley Fighting Vehicle. After a successful
      delivery programme, we have now completed one of the final milestones of that
      project where the vehicle has been successfully tested in the US in
      collaboration with the RCCTO.
 ●    Engineering Delivery Partner (EDP) passes £1bn orders - our EDP programme has
      continued to deliver growth through Q1 with total contract orders now
      surpassing £1bn since inception in October 2018. Operational performance
      remains strong with EDP assessed by the UK MOD as delivering good value for
      money. This test was a key part of successfully passing the four-year review -
      providing further confidence in our service quality and as an enabler for
      essential UK defence capabilities.
 ●    £19m artificial intelligence (AI) cyber defence win - we have won a £19m
      contract to support UK's DSTL project called Autonomous Resilient Cyber
      Defence (ARCD) - a multi-year programme to develop and demonstrate
      self-defending and self-recovering concepts for military platforms and
      networks in the face of increasingly complex cyber-attacks. Ensuring that
      tanks, aircraft and ships can automatically identify and defend themselves
      against a Cyber attack reduces the need for human intervention and provides a
      quicker response time, thereby reducing the risk of the platform being
      compromised and ultimately protecting the sailors, airmen and soldiers who use
      them.
 ●    Global leverage of Test & Evaluation (T&E) capability - our Sovereign
      T&E Skills programme has launched and is making good progress by
      leveraging our UK capabilities to grow sovereign T&E capability in
      Australia and Canada. By accessing the unique knowledge and experience of our
      T&E subject-matter experts, we are offering a tailorable, holistic
      learning programme designed to build sovereign skills and capabilities to
      support customers in delivering complex T&E outcomes. The programme blends
      formal, social and experiential learning which is defence standards-based,
      quality-assured, and provides measurable progress towards a defined outcome
      set.
 ●    50% flying hours increase in Germany - we are seeing continued demand for the
      services delivered by our German business with flying hours for our Bundeswehr
      customers, a key performance metric, now 50% higher than in 2019. Allied to
      these higher levels of service provision, we have recently secured an €18m
      contract to continue our core deliveries over the next 12 months.
 ●    Net-Zero plan verification - first company in the A&D sector and one of
      the first 20 companies globally to have our Net-Zero plan verified by the
      Science Based Targets Initiative (SBTi). Our Net-Zero Plan includes 2030 and
      long-term Net-Zero science-based GHG emissions reductions targets, which are
      aligned with the 1.5°c pathway. They are based on a planned programme of
      activities, applying a data-driven approach to inform what we do and when. We
      developed these in accordance with the SBTi Net-Zero Standard and criteria and
      the associated GHG Protocol Corporate Standards. In June 2022 the SBTi
      verified our near and long-term Net-Zero science-based targets. We are also
      delighted to be part of the Business Ambition for 1.5°c campaign, which is
      part of the UN-backed Race to Zero.

AGM

QinetiQ's 2022 Annual General Meeting (AGM) will be held at 11am today at
Ashurst LLP, London Fruit & Wool Exchange, 1 Duval Square, London E1 6PW.

About QinetiQ

QinetiQ (QQ.L) is a leading science and engineering company operating
primarily in the defence and security markets. We work in partnership with our
customers to solve real world problems through innovative solutions delivering
operational and competitive advantage. Visit our website www.QinetiQ.com
(http://www.QinetiQ.com) . Follow us on LinkedIn and Twitter @QinetiQ.  Visit
our blog www.QinetiQ-blogs.com (http://www.QinetiQ-blogs.com) .

For further information please contact:

 John Haworth, Group Head of Investor Relations:                              +44 (0) 7920 545841
 Lorna Cobbett, Citigate Dewe Rogerson (Media enquiries):                     +44 (0) 7771 344781

 

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