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Taking stock: Qinetiq looks to US to offset domestic defence gloom

Products that protect US soldiers are helping Qinetiq through the defence downturn

With the global financial meltdown showing little sign of easing and, if anything, heading towards a second dip recession, governments around the world are looking for ways to ease their financial burdens. Where sectors such as education and health have been ring-fenced against cuts, the brunt of fiscal pruning has fallen on defence budgets, leaving companies in the defence industry extremely vulnerable.In the UK the current scenario is particularly bleak. Around 1,020 Royal Navy personnel were told on 30 September they are being made redundant, shortly after defence giant BAE Systems announced nearly 3,000 job losses. Helicopter manufacturer AgustaWestland is shedding people too, and the industry’s trade organisation, ADS, is warning that 20,000 to 30,000 posts could go from the sector.

One company appears to be bucking the trend, though. Farnborough-based Qinetiq has delivered a better-than-expected performance in the first half of the year, according to a pre-close trading update, buoyed by strong US military sales. The company gives credit to impressive sales of bomb-disposal robots and a high-tech net designed to protect armoured vehicles from rockets.

Qinetiq employs more than 11,000 staff worldwide and offers services across defence and security markets, including submarine technology, police force forensics and space flight.

“While conditions in our principal markets remain challenging, the group’s performance for the first six months of the year has been better than expected, driven by US military product sales in the Global Products business, where orders have been weighted to the first half and in particular the second quarter, and by the group-wide self-help programme,” a company spokesperson said.

Qinetiq said strong sales of its Q-Net product and Talon robots had driven sales at the Global Products arm.

The Q-Net system uses a net design developed by Qinetiq North America, DARPA and the US Office of Naval Research to protect vehicles against rocket-propelled grenades. It has been subjected to extensive live fire and laboratory tests. Due to the design of the net system, tests also indicate that vehicles are provided with RPG defeat protection from all angles (360°) including overhead protection.

The system is 50-60 per cent lighter than metallic armour systems. This reduction allows for RPG protection for vehicles that cannot support the excessive weight of other technologies.

Talon military robots are lightweight tracked vehicles that are widely used for explosive ordnance disposal, reconnaissance, and communications in virtually any terrain.

Qinetiq, which traces its origins to Britain’s state-owned Defence Research Agency, is divided into three divisions, UK services, US services and Global Products, which have all been impacted by reductions in defence budgets.

In the UK, the government aims to reduce its defence spending by 8 per cent over the next four years in a move likely to restrict and delay new contracts. But Qinetiq has been implementing a self-help plan to strengthen the business, which had boosted results in the first half of the year.

Pre-tax profits were a healthy £26.6m in the year to 31 March a vast improvement on the £66.1m deficit in the previous year.

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