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UPDATE 1-Ultra sees flat profit on defence programme delays
November 16, 2012 / 7:46 AM / in 5 years

UPDATE 1-Ultra sees flat profit on defence programme delays

LONDON, Nov 16 (Reuters) - British defence company Ultra Electronics said budget constraints in the UK and United States would lead to a flat profit in 2012.

“In both the U.S. and UK defence markets, contract officers are delaying the start of new programmes and are unwilling to commit more than incremental funding from approved programmes, resulting in a reduction of order flow,” Ultra said in a statement on Friday.

“Against this backdrop the board expects the group’s performance in the year to be sustained around 2011 levels.”

The company, which reported a 2011 underlying pretax profit of 114.9 million pounds ($182.4 million), is expected to post an average 2012 pretax profit of 109.92 million pounds, according to a Thomson Reuters I/B/E/S poll of nine analysts.

Defence firms around the world have seen contract awards delayed and some existing deals cancelled as politicians in the U.S., the world’s biggest spender on military equipment, argue over how to cut the country’s deficit. Britain has also cut defence spending in a bid to rein in its large deficit.

Despite the slowdown in defence spending Ultra said it had recently won substantial orders from the U.S. Navy on perimeter security, anti-terrorism and energy control products as well as an order to provide targeting pods for Britain’s air force.

Ultra, which also makes aerospace products, said its finance director Paul Deane would leave the company in March 2013 and that it had started the search for his replacement.

Shares in Ultra, which have fallen 6 percent in the last month, closed at 1,529 pence on Thursday, valuing the group at around 1.06 billion pounds.

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