Qioptiq logo Raytheon

BUSINESS NEWS

29 May 11. The head of Airbus parent EADS is pushing for a veto right to be introduced in the defense industry to prevent hostile takeovers, a German magazine reported on Sunday.
“Its not about handbags or luxury goods, its about an industry with national interest,” Louis Gallois told Focus magazine in a prerelease of an interview to be published on Monday. “Therefore there must be a veto option against hostile takeovers,” he said, adding that there were ways of giving the governments of France and Germany the respective rights to intervene. (Source: Reuters)

26 May 11. Qinetiq, the defence technology group, announced a full-year pre-tax profit, following a loss of more than £66m in the previous year, on the back of “exceptional” sales of its Q-Net vehicle armour and progress in cutting costs. Revenue growth of 66 per cent in global products – one of three new divisions Qinetiq has been restructured into – helped the group achieve a pre-tax profit of £26.6m in the year to end-March. The defence technology group, which makes the Dragon Runner robot (above), has returned to profit. The growth was largely driven by sales of the Q-Net “vehicle survivability” product, which was launched on to the market 12 months ago and has been deployed by the US, French and Polish armed forces. Qinetiq claims Q-Net – a Kevlar web suspended on frames attached to vehicles – is lighter than conventional armour and more effective in defending against attack from rocket-propelled grenades. Group revenues increased from £1.62bn last year to £1.7bn. But the group conceded that Q-Net’s sales would not be sustained this year, as it reported revenues in the US Services and UK Services divisions had fallen 7 per cent and 10 per cent respectively. Announcing the reinstatement of a dividend payment, Leo Quinn, chief executive, said: “These are a good set of results in a challenging environment.” He also pointed to an almost halving of net debt from £457.4m to £260m. Mr Quinn acknowledged the sharp reduction in UK defence spending following the government’s Strategic Defence and Security Review, and said that it was “still unclear as to what the [government] priorities are”. Mr Quinn also refused to rule out a headcount reduction or future asset sales. William Shirley, analyst at Liberum Capital, said sales revenue undershot their estimates by £44m and that underlying earnings per share were 8 per cent lower than expected.
Mr Shirley said the outlook remained “challenging” and noted that “Qinetiq has a relatively low visibility and relies on a large number of small contracts”. Shares in Qinetiq edged up 0.3p to 112.3p in London trading. (Source: FT.com)
FT Comment
The outlook promises to be extremely challenging given severe cuts to defence budgets on both sides of the Atlantic. Analysts appear divided on the scope for further cost-cutting measures and the extent to which these could offset the anticipated decline in Q-Net sales. While a shift in focus to the use of more off-the-shelf products may help reduce overheads, it could also stymie the development pipeline. Shares in Qinetiq trade at 8.2 times 2012 prospective earnings, slightly below its domestic peer group at 11.1 times. A large UK exposure and the loss of recurring revenues from Q-Net justify this discount. (Source: FT.com)

28 May 11. BAE announces agreement to sell Regional Aircraft Fleet and Asset Management business. BAE Systems announced today an agreement to sell its commercial aircraft lease portfolio and Asset Management business to investment affiliates of Fortress Investment Group LLC (NYSE:FIG). The sale, which is expected to close in the third quarter of 2011, is for a cash consideration of $187m, subject to certain post-completion adjustments. Completion is conditional, amongst other things, upon regulatory approval. The business, known as BAE Systems Asset Management, is the world’s second largest regional jet lessor by fleet value and the tenth largest aircraft lessor by f

Back to article list