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Qinetiq warns of potential writedown following supply chain problems

UK-based defence technology group Qinetiq has warned of a potential one-off writedown, blaming technical and supply chain issues on one of its large programmes.

The UK group said in a trading update on Thursday that it hoped to keep the cost to under £15m, without giving further details. It maintained its medium- to long-term guidance and plans to make acquisitions to enhance its growth.

“We are experiencing technical and supply chain issues on a large complex programme, which, if unmitigated, could result in the need for a one-off writedown to our short-term guidance,” Qinetiq said. “We are working closely with our customer and are making progress, jointly with our supply chain, towards recovery of the programme and mitigating this risk to less than £15m.”

Qinetiq said its half-year earnings were “in line” with market expectations.

For the full year, it anticipates mid- to single-digit sales growth at about 5 per cent with its operating profit margin coming in at the lower end of its 11 to 12 per cent expected range before any one-off writedowns. In the short-term, however, it anticipates its margins will be about 100 basis points lower.

Chart showing Qinetiq’s share price

“This forecast includes short-term effects of the customer’s mission shifting from Afghanistan and Covid-related delivery and supply chain challenges in the US,” Qinetiq said.

The company’s shares fell as much as 10 per cent in early London trading on Thursday, which has turned their performance for the year to a decline of 7 per cent.

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