Qinetiq chasing acquisitions as record orders on global tensions

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Qinetiq, the British defense technology group specializing in robotics, cyber and high-energy laser weapons, is on the hunt for acquisitions as it looks to double its revenues to around £3bn over the next four years.

The FTSE 250 company set the new target as it reported record-high order books and double-digit increases in profit and revenue for the full year through the end of March, buoyed by heightened geopolitical tensions in the wake of the war in Ukraine .

Underlying pre-tax profit for the year to the end of March jumped 33% to £189.7m, with revenue up 20% to £1.6bn. Orders rose 41% to £1.7bn.

The company said it plans to grow the company to around £3 billion in revenues by 2027, including through further acquisitions.

Qinetiq sealed two acquisitions last year, including the purchase of Avantus Federal, a cyber and data company serving US federal agencies, in a deal valued at approximately $590 million.

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 directed-energy weapon for killing hypersonic missiles in the UK called Dragonfire, with partners including Leonardo UK and MBDA, the rocket company.

Qinetiq was demerged from the UK Ministry of Defense in 2001. Its main clients are the UK, US and Australian governments, which account for more than 90% of its revenues.

“Our customers are realizing that technology and innovation are the way to outpace their opponents,” said Chief Executive Officer, Steve Wadey.

“All of our countries, the US, the UK and Australia, are increasing their R&D investment.”

During the year, the company also renewed a £260 million, 10-year maritime agreement with the UK’s Submarine Delivery Agency to provide cloaking and support capabilities to the Royal Navy’s surface and underground fleet, including nuclear deterrence of the country.

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

The United States required the largest R&D budget ever at $145 billion, up 40% from 2020.

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

Shares of the company were trading up 1% to 374 cents on Thursday.