23 Feb 04. Ultra Electronics announced a sharp rise in full-year profits as the niche defence contractor confirmed boardroom changes.

Julian Blogh, the chief executive who is to become chairman and be succeeded by Doug Caster, managing director, said acquisitions and increased orders had fuelled growth.

“With a strong balance sheet driven by high quality of earnings, Ultra enters 2004 with the capacity to continue its strategy of acquiring complementary businesses that strengthen its market niches. These factors, coupled with the strong order book, give the board confidence in the performance of the group in 2004,” he said.

The company, which specialises in integrated radio, command and control systems known as “battlespace IT” said it was confident about the current year after it reported record levels of sales, profit and order book for the year to December. Its operating margin before goodwill amortisation topped 13 per cent, helped by some recovery in the civil aerospace spares and repairs market during the period and increased efficiency achieved on contracts. The order book increased from £348m a year ago to £375m at the year-end.

The final dividend is increased by 9.3 per cent to 8.2p for a total pay-out of 12.3p (11.2p). Profit before tax was £29.5m (£26m) on turnover of £284m (£260m). Earnings per share emerged at 30.8p (27.3p).

Ultra’s share price eased by 1½p to 542½p.Some analysts said the numbers were broadly in line with their forecasts but were encouraging considering the weakness of the dollar – about a third of group sales are generated in North
America.

However, Steve East at Credit Suisse Boston, said: “This is a high quality defence company [but] we believe it is already priced as a quality defensive play and we see more value in some of the cyclicals in the sector.” (Source: FT)