Yahoo Finance Qinetiq shares rise after unveiling £100m share buyback programme
Qinetiq shares rose nearly seven per cent this morning after it unveiled a share buyback programme on the back of strong orders for its military tech.
In a third quarter update, the defence contractor said it would return up to £100m to shareholders over the next 12 months, after revealing an “excellent” year-to-date order book of around £1.35bn.
Full-year revenue under contract improved to 95 per cent, while cash generation remained strong, with cash conversion “significantly above” 100 per cent in the quarter. “Overall, the Group is making good progress and we remain on track to deliver in line with expectations for 2024.”
It comes after a tepid reaction to the stock over the last year. Shares are down 6.34 per cent over the last twelve months, despite a boom in military spending globally and record performances from the likes of BAE Systems, Chemring and Lockheed Martin.
Steve Wadey, Qinetiq’s chief executive officer, said: “Our excellent order intake demonstrates the continuing demand for our high-value, cutting-edge services and products. Our operational performance in the third quarter underlines our confidence in delivering another year of good organic growth at stable margins with strong cash conversion.”
However, the Hampshire-based firm said that US market uncertainty and budget delays had impacted revenues at Avantus, its US-based cyber defence unit, which it acquired in 2022.
Investors had been closely watching the update to see whether the performance of Avantus would improve, after “slower than expected” revenue last year.
Prior to today’s announcement, Citi analysts had recommended a share buyback programme as a more effective means of turning around the stock’s performance, as opposed to spending on further acquisitions.
Qinetiq said at this present time, “no potential acquisitions meet our rigorous strategy-led and financial criteria”.
