Shares in Qinetiq tanked more than 20 per cent in early deals on Monday after it slashed guidance and announced plans to re-structure its US arm amid ongoing contract delays.
The London-listed defence contractor said it expected a “goodwill impairment charge” of around £140m to the US business due to the market backdrop and operational performance.
Qinetiq has been beset by contract delays, which have impacted both its US arm and its UK intelligence business.
In a statement to markets, the company said it had experienced further delays to short cycle contract awards in both segments over the most recent quarter.
Organic revenue growth for full-year 2025 is now expected to come in at around two per cent, at an underlying margin of 10 per cent, including £25m to 30m of one-off in-year charges, Qinetiq said.
The Farnborough-based outfit specialises in cyber and analytics capabilities, as well as advanced materials.
The share price slump came despite the announcement of an extension to its share buyback programme over the next two years by up to £200m.
Defence firms such as BAE Systems and Lockheed Martin have seen profits surge in recent years amid rising geopolitical tensions around the globe.
European nations have pledged to swell military budgets amid warnings from Donald Trump that the continent needs to step up military support for Ukraine in preparation for a peace deal with Russia.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said recent uncertainty had proved “more of a curse than a blessing” for Qinetiq.
Lay-offs in the US defense department may “exacerbate” the issues further, given its short-term contracts across the pond have been hit hard, she added.
“It seems spending decisions are being delayed amid the uncertainty. The current issues are expected to cause a £30m hit to the bottom line, and while longer-term opportunities appear more secure, shareholders are waking up to the fact that there may be volatile trading conditions for some time to come.”