Qinetiq ups buyback by £50m after solid first half

14th Nov 2024 08:58

(Sharecast News) - Shares in Qinetiq dipped on Thursday despite the aircraft engineering company delivering first-half results in line with expectations and announcing a new £50m buyback.

The security and defence contractor said it was extending its £100m share repurchase programme by a half as a result of "our continued focus on disciplined capital allocation".

Qinetiq saw revenues rise 7% year-on-year to £946.8m in the six months to 30 September, rising 8% on an organic basis.

The company said growth was driven by a strong performance in engineering delivery contracts in the UK and Australia, together with increased volumes in aerial targets across the world.

Operating profits were up 7% at constant currency at £106.6m, with the operating margin stable at 11.3%. Net cash flow from operations increased to £130.8m, up from £71.7m a year earlier, while net debt reduced to £190.9m from £273.8m.

The company said that order intake rose 9% to £1bn during the period, though the order backlog declined by 6% year-on-year to £2.9bn.

However, analyst Jamie Murray from Shore Capital pointed out that the order backlog was steady compared with the start of the year. "Given that QinetiQ's revenue has lower visibility than typical A&D companies, we place less emphasis on the backlog," Murray said in a research note.

"We have delivered a good operational and financial performance across the group, set against a backdrop of political change and an evolving threat environment," said chief executive Steve Wadey.

"Guidance for FY25 is unchanged and we remain on track to deliver our FY27 outlook of c.£2.4bn organic revenue at c.12% margin. We are well positioned for long-term sustainable growth with compelling value creation for shareholders."

The stock was down 1.5% at 459p by 0950 GMT.