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27 May 2010, 10:05
The new boss of Qinetiq today set out plans for a major restructuring after the former government defence research group revealed a slump in profits.
Leo Quinn, who took the helm in November, said the company was too complex and lacked strategic focus after its rapid growth fuelled by acquisitions and the company's entry into the US market. The US expansion has delivered lower-than-expected returns, while delays in orders from the Ministry of Defence have added to the company's woes as underlying profits for the year to March 31 fell to 85.7 million, from 130.2 million a year earlier. Including write-downs on the value of assets, the group reported a bottom-line loss of 66.1 million.
Qinetiq, which employs 7,000 people in the UK out of a total workforce of 13,000, warned that job cuts were likely as part of a drive to cut costs by around 10%.
Mr Quinn said: "Our markets are likely to remain uncertain for some time, but we now have a decisive programme of self-help to restore value. "We are acting to make our costs more competitive, our productivity better and our debt lower.'' Qinetiq - the former Defence Evaluation and Research Agency - can trace its heritage from the birth of powered flight in the UK at Farnborough through the development of radar during the Second World War.
The company has sites across the UK, at locations including Salisbury in Wiltshire, Portsmouth, Plymouth, Glasgow and Christchurch, Dorset. In its UK-focused Europe, Middle East and Africa (EMEA) division, the group said UK budget pressures and delays in contract awards had contributed to a fall in operating profits to 61.1 million from 84.2 million. Despite announcing plans to suspend its dividend for 12 months, Qinetiq's restructuring plans were welcomed in the City as shares opened 8% higher.