July 30 (Bloomberg) -- Ultra Electronics Holdings Plc, the provider of secure communications equipment to Britain’s prime minister, is considering further acquisitions after purchases propelled first-half sales growth.
Revenue increased 8 percent from a year earlier to 370.2 million pounds ($581 million), led by a 35 percent jump in the non-defense information and power systems businesses, Greenford, England-based Ultra said today in a statement. Earnings before interest and taxes and excluding acquisition-related costs rose 3 percent to 57.5 million pounds.
Ultra has completed eight acquisitions in the past two years as the manufacturer, which is also the world’s biggest supplier of sonar used to detect submarines, contends with slowing military spending by the U.S. and U.K. Chief Executive Officer Rakesh Sharma said Ultra, which can afford 100 million pounds annually on purchases, is open to buying companies in any industry where it already operates.
“In which sector we acquire next pretty much comes down to what becomes available next,” with targets possible in surveillance technology, communication systems, nuclear energy, transit-system power and power management, Sharma said in a telephone interview. “We are very comfortable with making acquisitions of 30 million pounds to 50 million pounds,” while a large deal that would reshape the business is “unlikely.”
Computing-system security is also a possible area for expansion, though “cyber is just another element of our many-eggs-in-many-baskets strategy.”
Ultra declined as much as 1.4 percent to 1,461 pence and was down 0.9 percent at 10:20 a.m. in London. The stock, which has been trading at the lowest price since January for about a week, has declined 0.7 percent this year.
First-half revenue excluding acquisitions, disposals or currency effects fell 1.4 percent. Net debt at the end of June widened to 67.7 million pounds from 10.1 million pounds a year earlier. The company raised its six-month dividend 4 percent to 12.2 pence a share.
Ultra Electronics expects sales to shift further to non-defense activities. About 45 percent of revenue is now generated from non-defense businesses. As sales on commercial-aircraft programs increase, that will “grow quite naturally by another 10 percent over the next couple of years,” Sharma said.
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