QinetiQ Boosts 2027 Forecast as US Defence Review Lifts Shares 11 Percent
QinetiQ's Financial Performance and Strategic Review
May 21 (Reuters) - QinetiQ was reviewing all options for its struggling U.S. business, it said on Thursday, while lifting its revenue growth and operating margin forecast for the 2027 fiscal year.
Shares of the British defence services contractor rose as much as 11% to about £4.77 - the biggest gainer on the pan-European STOXX 600 index.
Business Restructuring and Portfolio Simplification
The Hampshire, UK-based company, which offers testing and training as well as engineering services, has been restructuring its business, cutting costs, and simplifying its portfolio, particularly in the U.S.
Analyst Perspectives
"Seen as lower quality, more volatile, exiting this (U.S.) business, whilst likely painful relative to the price paid for it, would leave QinetiQ a higher quality organisation in our view, with a much cleaner strategy," Jefferies analysts said in a note.
U.S. Business Contribution
QinetiQ's U.S. business offers services such as advanced sensing, surveillance, cyber and intelligence capabilities and contributed 15% to the total revenue in the year ended March 31.
"The U.S. defence services market remained challenging during the year, reflecting a combination of budgetary pressures, a shift in customer spending towards platform and hardware programmes and slower contract awards," the firm said in a statement.
Order Intake and Financial Highlights
Order Intake Surges
ORDER INTAKE SURGES
QinetiQ forecast revenue growth of 3%-5% and an operating margin of 11%-11.5%, compared with its January forecast of around 3% organic growth and an 11% margin.
Backlog and Major Deals
Order intake surged 83% to £3.57 billion ($4.79 billion) in 2026, lifting its order backlog to £4.42 billion, mainly thanks to deals struck for its Europe, Middle East and Africa business.
Profit and Revenue
QinetiQ, which counts the UK Ministry of Defence and US Department of Defense among its customers, said underlying profit before tax rose 16% to £230 million, while revenue was broadly flat at £1.92 billion.
Other Industry Developments
U.S. President Donald Trump has ordered the U.S. department to rename itself as the Department of War, a change that will require action by Congress.
($1 = 0.7447 pounds)
(Reporting by Neeshita Beura in Bengaluru, Writing by Yadarisa Shabong; Editing by Harikrishnan Nair)
