Qinetiq Sees Pivot to NATO Allies to Boost UK Defense Company
Qinetiq Group Plc, the UK defense technology company, plans to pivot more to NATO allies to boost business as governments ramp up spending to defend the alliance's Eastern flank.
Countries such as Spain, Italy and Germany are increasingly using the company's test and training services in the UK, and there is rising demand for border surveillance in Poland and other Eastern European countries, Chief Executive Officer Steve Wadey said in a telephone interview. There is potential for more bilateral and multilateral agreements with NATO countries, he said.
'We're really looking to leverage our strong base in the UK towards not just the AUKUS nations, which is continuing, but also pivoting more into the NATO related allies,' Wadey said, referring to the security partnership between Australia, the UK and the US.
Qinetiq currently generates more than 90% of revenue from the UK, US and Australia. While the European business only accounts for about 3%, 'growth rates on it could be high,' even if the overall impact on the group remains limited, he said.
The importance of the UK business was illustrated on Thursday by Qinetiq's announcement that the UK's Ministry of Defence extended its long-term partnering agreement by five years, which is worth £1.54 billion. The contract to provide experimentation, test, evaluation and training support to the MOD will sustain 1,200 jobs at 16 sites across England, Scotland and Wales, it said. That deal increased total order backlog to about £5 billion.
Qinetiq provides products and services for air, land and sea including cyber security, military training, testing and unmanned and robotic systems, according to its website.
European governments have pledged hundreds of billions in spending to strengthen the region's military capabilities since Russia's 2022 invasion of Ukraine, as well as intensified US demands under President Donald Trump that NATO allies increase spending.
This week, as part of a broader agreement between the European Union and UK to reset relations, a defense and security pact committed to 'swiftly explore' British access to the EU's new €150 billion defense fund. 'I think it's positive,' Wadey said.
The company in March lowered its outlook, citing contract delays from UK and US intelligence and geopolitical uncertainty, sending the shares down a record amount. The company today announced a decline in full-year earnings and restructuring plan focused on the US, even while announcing record order intake and revenue that matched analysts expectations.
The stock is up about 10% this year, lagging the 43% advance in the STOXX Europe Total Market Aerospace & Defense index. The shares gained as much as 7.5% on Thursday. There hasn't been any takeover interest in the company, Wadey said, when asked about the stock's relative underperformance.
This article was generated from an automated news agency feed without modifications to text.
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