Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Qinetiq Drops Amid Cost Cuts on U.S. Defense Plans

Don't Miss Out —
Follow us on:

March 28 (Bloomberg) -- Qinetiq Group Plc, the partner to the U.K. military for a new drone development center, fell the most in more than nine months after saying it will take a charge of $25 million on cost cuts to adjust to lower U.S. defense spending.

Qinetiq fell as much as 5.3 percent to 195 pence, the most since June 15, and slipped 1.7 percent to 202.50 pence at 9.46 a.m. in London. The stock has risen 10 percent this year.

“The majority of these cost reductions are in the U.S. Services division where reduced federal services spending is creating a more competitive trading environment,” the London-based company said in a statement today. Acquired goodwill held in the unit will be reassessed at the end of the month, when the company’s financial year closes, it said.

Qinetiq and other defense contractors are contending with slowed activity at the Pentagon as well as reduced military spending in the U.K. The company’s cost cutting is focused on reducing property and infrastructure costs, as well as trimming management layers, it said today.

“It’s a reminder of the continued deterioration in the U.S. services end market,” William Shirley, a London-based analyst at Liberum Capital who has a hold rating on the stock, said in a note today. “The market remains tough and Qinetiq needs to pull another rabbit out the hat.”

The company, which is scheduled to report full-year results on May 23, said its U.K. business is performing well, in part owing to a “more competitive cost base.” The company reiterated that it is on course to meet its financial forecasts for the year ending March 31.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.