May 23, 2013 / 8:31 AM / 6 years ago

UPDATE 1-QinetiQ could sell U.S. business after $385 mln writedown

* Launches strategic review of U.S. services

* FY pretax profit 152.1 mln stg vs 110.2 mln stg

* Revenue falls 9.6 pct to 1.33 bln

* Maintains guidance as U.S. uncertainty persists

LONDON, May 23 (Reuters) - British defence technology company QinetiQ Group could sell its U.S. services division after a 256 million pound ($385 million) writedown prompted it to launch a strategic review of the business.

QinetiQ and other defence contractors have been hurt by continuing uncertainty over the impact of mandatory U.S. government spending cuts that have already caused some contracts to be delayed.

“We’re not ruling out anything at this moment in time, Chief Executive Leo Quinn told Reuters when asked if the QinetiQ was considering selling the division, though he added that it was “far too early”.

The purpose of the strategic review of the U.S. business, which will be carried out over the next year, is to determine the best way to maximise value, Quinn said.

Underlying operating profits at the subsidiary fell by nearly 32 percent to 21.9 million pounds in the year to March 31. The UK operation, meanwhile, increased operating profit by 40 percent to 85.8 million pounds.

Sales from the U.S. business, which provides engineering support to the NASA space agency and the U.S. Army, accounted for about 36 percent of the company’s 1.33 billion pounds revenue over the period.

The 256 million pound non-cash goodwill impairment in the U.S. division would not hurt the company’s earnings, Quinn said.

QinetiQ is maintaining its expectations for overall group performance for the current year, though this does not account for the impact of U.S. budget cuts, he said.

The company, which was previously owned by the British government, also makes products such as drones and bomb detection robots.

It has focused on growing organically by expanding its portfolio of civil products, though Quinn said the company could make bolt-on acquisitions in the fibre-sensing and space sectors.

Its UK business’s strong performance helped it post an overall 6 percent increase in underlying pretax profit to 152.1 million pounds from 110.2 million over the year to March 31, beating analyst expectations of about 145 million pounds, Reuters data showed.

Quinn also said the company expects to benefit from a potential plan by the UK government to outsource its equipment procurement to a private contractor. QinetiQ could advise either sellers or the Ministry of Defence.

The company increased its full-year dividend to 3.8 pence from 2.9 pence.

Shares in QinetiQ were down 0.4 percent at 202.9 pence by 0800 GMT, valuing the company at 1.3 billion pounds.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below