U.K. Defense Firm Qinetiq Takes $20 Million Hit on Project Delay

(Bloomberg) --

QinetiQ Group Plc posted a 14.5 million pound ($20 million) writedown as the U.K. defense firm suffered technical problems with a complex project, and said it’s also experiencing order weakness in the U.S.

The first issue has delayed a service contract for a key client, QinetiQ said in a statement Thursday, adding that it can’t disclose further details without prejudicing ongoing negotiations. The concern was first flagged last month when the firm said it aimed to keep the hit below 15 million pounds.

U.S. sales have been hurt by the impact of the coronavirus pandemic, the transition to a new presidency and a shift in the Pentagon’s military priorities from counter-insurgency missions in Afghanistan to countering China in the Indo-Pacific region, the London-based company said.

Qinetiq, whose activities include evaluating warplanes and developing drones, land and sea systems, said after-tax profit fell by two-thirds in the first half, with sales flat. The firm counts the U.K. Ministry of Defence, of which it was once a part, as its biggest customer.

The stock traded 1.8% lower at 265.2 pence as of 8:13 a.m. in the U.K. capital, having fallen 14% when the issues were first disclosed.

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