U.K. Defense Firm Qinetiq Takes $20 Million Project Hit
QinetiQ Group Plc posted a 14.5 million pound ($20 million) writedown as the U.K. defense firm suffered technical problems with a complex project, and said it’s also experiencing order weakness in the U.S.
The first issue delayed a service contract for an unnamed key client after a supplier glitch held up system development. The concern was first flagged last month when QinetiQ said it aimed to keep the hit below 15 million pounds.
The company doesn’t plan to change suppliers but is working to resolve the problem and aims to conclude this process by the end of QinetiQ’s financial year in March, Chief Executive Officer Steve Wadey said in an interview Thursday. Talks are continuing with the customer to amend the contract.
“Our objective remains to reduce the impact of the writedown,” he said.
U.S. sales have been hurt by the impact of the coronavirus pandemic, the transition to a new presidency and a shift in the Pentagon’s military priorities from counter-insurgency missions in Afghanistan to countering China in the Indo-Pacific region. A number of contracts were delayed or halted as a result of the accelerated withdrawal from Afghanistan, Wadey said.
QinetiQ, whose activities include evaluating warplanes and developing drones, land and sea systems, said after-tax profit fell by two-thirds in the first half through September, with sales flat. The firm counts the U.K. Ministry of Defence, of which it was once a part, as its biggest customer.
The stock traded 1.5% lower at 266 pence as of 9:32 a.m. in the U.K. capital, having fallen 14% when the issues were first disclosed.
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