* FY dividend up 21 pct to 4.6 pence
* FY profit down 21 pct to 132.7 mln stg, beating forecasts
* Sees 2014/15 profits flat
* Shares up 1.7 pct
(Adds CEO comments, share price, analyst comment)
By Sarah Young
LONDON, May 22 British defence technology
company QinetiQ Group hiked its dividend on Thursday,
saying it expected long-term growth in civilian customers to
compensate for declining military spending as it forecast
unchanged full year profits.
The company, which was part of Britain's Ministry of Defence
before being spun off in 2002, reported a 21 percent fall in
annual profits for the twelve months to March 31, after U.S
military spending fell.
Last year it said it would seek to compensate for that
decline by gaining more civilian customers for its technology
products, and the 21 percent rise in its full-year dividend to
4.6 pence was based on the outlook for commercial demand.
"Dividend is really about the long-term expectation. And if
we look at our portfolio of growth engines... we're encouraged
by the medium term future for those products," Chief Executive
Leo Quinn said in an interview with Reuters on Thursday.
Quinn said that excluding its U.S. services division, which
it said in April it was selling for up to $215 million, profits
for the twelve months to March 2015 would be flat.
QinetiQ's full-year underlying operating profit fell 21
percent to 132.7 million pounds ($224 million), beating a
company-supplied analyst consensus forecast of 127 million
The firm is pinning its growth hopes on units including,
OptaSense, which makes fibre-optic cables that detect
disturbances in oil and gas pipelines and can be used in shale
gas extraction, and Powerline Sensor, used to determine small
drops in power on grids.
Quinn said OptaSense had increased revenues from zero to $25
million sales in the Middle East over the last two years.
Asked about where sales for Powerline Sensor, which is due
to launch in North American shortly, were headed, he said: "I
can't tell you whether the scale of it will be $10 million or
$100 million but I know it will be somewhere in that range."
Shares in QinetiQ, which has a market capitalisation of 1.3
billion pounds, were up 1.7 percent at 202.5 pence,
outperforming Britain's midcap index which was up 0.5
Liberum analysts suggested the firm needed OptaSense to sell
well to justify further gains in its share price.
"The buy case is increasingly predicated on a return to
organic growth. Without a big OptaSense win, and with ongoing
pressure on conflict related products, this will be a
challenge," they said in a note.
(Reporting by Sarah Young; editing by Kate Holton and John