Defence firm QinetiQ said it is on course to achieve its financial expectations for the year ending March 31, 2013 but has said that although the UK remains strong, the US market conditions remain challenging.
The company last month secured a £1bn deal with the Ministry of Defence to support to the armed forces over the next five years.
The UK division is “benefiting from a more competitive cost base, better project execution and improved alignment with customer needs,” QinetiQ said in a statement.
However it cautioned that order flow and visibility were much lower than usual in the US as customers defer decisions due to continued budget uncertainty. QinetiQ said the business is proactively managing its cost base in order to maintain competitive rates.
“These actions are focused on cutting property and infrastructure costs, as well as reducing management layers, and will result in an exceptional charge this financial year of approximately $25m,” it said.
“The majority of these cost reductions are in the US Services division where reduced federal services spending is creating a more competitive trading environment. Given this market background, the carrying value of the acquired goodwill held in this division will be re-assessed at the year end.”
