Qinetiq on hunt for acquisitions as orders at record on global tensions

Qinetiq, the UK defence technology group specialising in robotics, cyber and high-energy laser weapons, is on the hunt for acquisitions as it seeks to double its revenues to around £3bn in the next four years. 

The FTSE 250 company set out the new target as it reported record level orders and double-digit increases in full-year profit and revenues to the end of March, buoyed by the heightened geopolitical tensions in the wake of the war in Ukraine. 

Underlying pre-tax profit for the year to end March jumped 33 per cent to £189.7mn, with revenues up 20 per cent to £1.6bn. Orders were 41 per cent higher at £1.7bn. 

The company said it wants to grow the company to around £3bn of revenues by 2027, including through further acquisitions.

Qinetiq sealed two acquisitions last year, including the purchase of Avantus Federal, a cyber and data firm serving US federal agencies, in a deal worth about $590mn. 

The company last year signed a deal to help Australia develop a laser weapon to help it counter missile threats. It is already spearheading a plan to develop a hypersonic missile-killing directed energy weapon in the UK called Dragonfire, with partners including Leonardo UK and MBDA, the missile company. 

Qinetiq was demerged from the UK Ministry of Defence in 2001. Its main customers are the UK, American and Australian governments, which make up more than 90 per cent of its revenues. 

“Our customers are realising that technology and innovation is the way to overmatch their adversaries,” said chief executive, Steve Wadey. 

“All of our countries, the US, the UK and Australia are increasing their investment in research and development.”

During the year, the company also renewed a 10-year, £260mn maritime agreement with the UK’s Submarine Delivery Agency to deliver capabilities in stealth and support to the Royal Navy’s surface and subsurface fleet, including the country’s nuclear deterrent.

Qinetiq, Wadey added, has increased the size of its “addressable market” from £20bn to £30bn given recent pledges of higher defence spending by its three main government customers.

The US has requested the largest ever research and development budget at $145bn, increasing 40 per cent since 2020. 

Wadey said he expects the recent agreement between the US, UK and Australia to supply Canberra with nuclear-powered submarines to help boost Qinetiq’s long-term growth strategy.

Shares in the company were trading up 1 per cent at 374p on Thursday.