QinetiQ lands £1.54bn MOD deal, posts strong orders

QinetiQ has agreed a £1.54 billion, five-year extension to its Long Term Partnering Agreement (LTPA) with the Ministry of Defence, helping to sustain 1,200 jobs across 16 sites in the UK and continuing support for vital test, training, and evaluation services, according to the organisation.

The extension will carry the agreement through to 2033 and is designed to modernise the UK’s test and evaluation (T3E) capabilities to support next-generation defence needs, including uncrewed systems, hypersonics, and directed energy weapons. It also includes an additional £166 million order related to ongoing investment in T3E infrastructure.

QinetiQ stated that the renewed agreement will enhance operational readiness for both UK and allied forces and help position the UK as a leading centre for test and evaluation services. As part of the extended deal, QinetiQ and the MOD will also improve access for small and medium-sized enterprises (SMEs), supporting a wider industrial base and contributing to innovation in defence.

Defence Secretary John Healey MP described the extension as a key step in strengthening the UK’s defence posture: “Rigorously tested equipment and the trialling of emerging technologies are key to ensuring our armed forces are using combat-ready capabilities on the frontline.” He added that the deal supports British industry and innovation, calling it “an engine for growth across the UK.”

QinetiQ CEO Steve Wadey said: “The extension of our partnership with MOD enables us to continue investing to deliver the transformational change in test and evaluation that’s required to ensure our armed forces have operational advantage over disruptive technologies.”

The agreement supports a supply chain of more than 825 UK-based companies, including 590 SMEs. It also builds on QinetiQ’s role in major defence activities, such as hosting NATO’s Formidable Shield exercise and supporting programmes like the Global Combat Air Programme (GCAP), the Dreadnought nuclear submarine fleet, and drone development.

The announcement came alongside QinetiQ’s full-year results for 2024/25. The organisation reported a 2% increase in revenue on an organic basis and a 1% increase on a reported basis. Order intake rose 12% year-on-year to £1.95 billion, contributing to a total order backlog of £2.8 billion. The company also highlighted strong cash conversion at 105%, reducing its leverage ratio to 0.4x.

While the company reported a statutory operating loss, this included £305.9 million in specific adjusting items, primarily related to legacy US operations, goodwill impairment, and a non-cash impact from a sale and leaseback transaction. QinetiQ said it has launched a restructuring programme to improve efficiency and better align its operations with current defence priorities.

Wadey said: “We have taken decisive action and are focused on reshaping the business for growth, with a clear restructuring plan to strengthen and capture the increasing opportunities within our key markets.”

Underlying earnings per share (EPS) were 26.1p, down 11.2% from the previous year. However, the company announced a 7% increase in its full-year dividend to 8.85p per share and confirmed that £103 million of its existing £150 million share buyback programme had been completed. A new £200 million buyback over two years is due to begin in June.

For the 2025/26 financial year, QinetiQ expects revenue growth of around 3%, with 75% of that revenue already secured. It anticipates a margin of approximately 11%, due to restructuring, and expects EPS growth between 15% and 20%.

Looking ahead, the company said it will increase its focus on leveraging its UK base to support NATO and allied customers while continuing to invest in people, technology, and core capabilities.