UPDATE 2-QinetiQ profit up 22 pct, cuts 400 jobs

* British jobs to go amid calls for strike action

* Underlying profit up 22 percent to 155 million pounds

* Dividend up 12 percent at 4.75 pence

* Shares up 1.7 percent

(Adds CEO comment, detail, shares)

By John Bowker

LONDON, May 21 (Reuters) - British secret weapons tester QinetiQ Group (QQ.L) is cutting 400 jobs in the UK despite a 22 percent hike in full-year profits, risking further confrontation with trade unions threatening strike action.

QinetiQ said it needed to cut jobs as part of a widespread review of its UK cost-base. The firm, formerly a government department, is suffering from declining revenues from Britain's Ministry of Defence (MoD) -- a key customer.

"The MoD's research budget is coming down in terms of value," Chief Executive Graham Love told reporters, adding that the company was trying to move more of its business into services and equipment upgrades to offset declines.

QinetiQ's revenue from MoD research was down 23 percent from a year earlier as the government opened more contracts to competition. The group is upgrading Chinook helicopters and training soldiers as well as testing weapons.

QinetiQ shares, down 9 percent this year, were up 1.7 percent at 146 pence by 0904 GMT, valuing the business at 965 million pounds.

BRIGHT STAFF

The job cuts come on top of a pay freeze at the company that has seen union officials ballot around 2,600 staff for strike action. [ID:nLI725125]

However, Love said he did not expect workers to go ahead with the walk-out, and accused the Prospect union and its allies of not knowing what they are talking about.

"I stay closer to staff than the trade unions do. Our staff are extremely bright, and are also shareholders," he said, saying they would understand that the firm needed to reign in costs in the current climate.

Operating profit rose 22 percent to 155 million pounds ($245 million) in the year to end-March, against analyst forecasts of 150 million, according to Reuters estimates.

The rise came due to a 42 percent reported revenue boost in North America, where the company has been expanding in recent years through acquisition.

QinetiQ hiked the dividend 11.8 percent to 4.75 pence, a move it said showed its confidence in future growth.

QinetiQ's short lifespan as a private company has been dogged by controversy. The government first sold a stake to U.S. private equity group Carlyle in 2003, but suffered heavy criticism for selling too cheaply after the group's 2006 flotation saw investors reap massive profits. (Reporting by John Bowker; Editing by Dan Lalor) ($1 = 0.6331 pound)