Ultra Electronics reports strong order intake

Ultra Electronics, the international defence, security, transport and energy group, said its order intake continued to be strong for the remainder of 2017 at around £900m.

As previously reported, full year revenue is expected to drop to £770m and underlying operating profit to just over £120m because of mounting pressures in the funding of UK defence programmes.

Cash conversion is expected to be above 90% following 92% for the year ended 31 December 2016.

The board remains minded to recommend a final dividend of 35p per share and will finalise this when the group announces its full year results. The group enters 2018 with an order cover on expected 2018 revenues of around 62%, compared with approximately 56% in 2017.

The company is expecting modest progress in underlying revenue and operating profit at constant currencies after investing for the future through increased R&D and capital expenditure.

The medium term guidance for cash conversion remains in line with the 80% to 85% levels announced in November.

Douglas Caster, executive chairman, said: "The group's core strengths include world-leading positions in many of its specialist capabilities. It has positions on a broad number of long term platforms and programmes, significant exposure to the strengthening US defence budget, and growing demand for advanced defence technologies.

"The group also has good visibility through a strong order book of just under £900m which excludes contributions from a large volume of IDIQs (US DoD indefinite delivery indefinite quantity contracts) and other off order book aerospace contracts.

"The board is confident that Ultra has sustainable operating trading momentum with a significant number of recent long-term contract wins."