New Qinetiq boss targets restructure after slump

QINETIQ'S new boss yesterday 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 its entry into the US.

The American expansion has delivered lower-than-expected returns, while delays in orders from the Ministry of Defence have added to the firm's woes.

Underlying profits for the year to 31 March fell to 85.7 million, from 130.2m a year earlier. Including write-downs on the value of assets, the group reported a loss of 66.1m.

Qinetiq, which has 7,000 employees 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 about 10 per cent.

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 – formally the government's Defence Evaluation and Research Agency – can trace its heritage from the birth of powered flight in the UK at Farnborough and through the development of radar during the Second World War.

The company has sites across the UK, at locations including Glasgow, Salisbury in Wiltshire, Portsmouth, Plymouth and Christchurch in Dorset.

In its UK-focused Europe, Middle East and Africa division, the group said UK budget pressures and delays in contract awards had contributed to a fall in operating profits to 61.1m from 84.2m.

The firm also announced plans to suspend its dividend for 12 months.