Ultra Electronics post higher half-year sales and orders, confident on outlook

Ultra Electronics posted a solid increase in half-year sales and profits on the back of "strong" US defence spending and sounded a confident on its full-year outlook.

For the six months ending on 30 June, the defence electronics manufacturer posted a 10.4% rise in reported revenues to reach £387.1m, alongside a 4.6% increase in its order pipeline to £1,041.0m.

Commenting on the outlook for the firm, its chief executive officer, Simon Pryce, cited the positive momentum that the company was experiencing going into the back half of 2019, while highlighting the good positions won on several key new programmes which he said had "signifcant long-term potential".

"It has been a solid start to the year. Ultra is benefitting from strong US defence spend and increased demand on existing programmes," Pryce added.

Management also flagged what it described as "good progress" on its initiatives to further hone the company´s focus on becoming an application-engineered defence solutions provider, specialising in Maritime, Intelligence and Communication, instead of a panoply of largely autonomous site-based businesses.

Linked to the above, the company was in the midst of reviewing its processes, organisational model and was set to implement an accelerated investment plan in IT into the second half.

On an underlying basis, reported profits before tax increased by 6.7% to £46.5m for earnings per share o 52.5p.

Organic sales also rose over the first half of the year, by 8.3%.

The group's net debt was little changed during the period, although as a proportion of earnings before interest, taxes, depreciation and amortisation it reduced from 1.39 times to 1.32.

Ultra also reiterated its long-term guidance for research and development spend of 4-0-5.0% of sales, although total capital expenditures were set to rise from £18.3m for 2018 to £20.0-25.0m in 2019.

In line with its current dividend policy, the interim payout was increased by 2.7% to 15.0p.

As of 0817 BST, shares of Ultra Electronics were gaining 5.06% to 1,950.0p.