By Cristina Gallardo

QinetiQ said it would launch a restructuring drive to bring down costs, refine its U.S. strategy and focus on growing its business with North Atlantic Treaty Organization countries, after posting a loss in earnings for fiscal 2025.

QinetiQ generates the vast majority of its revenue in U.K., the U.S. and Australia, but its fiscal 2025 results took a hit from a slowdown in the award of British contracts and the uncertainty caused by the change in the U.S. administration, Chief Executive Steve Wadey said Thursday, adding that the group has taken decisive action to reshape the business for growth.

"We are increasingly our strategic focus on NATO and its allies in particular," Wadey told a call with investors.

The London-listed company is seeing increasing demand for its test and training services from the armed forces of NATO countries such as Spain, Germany and Italy, Wadey said.

A number of Eastern European countries wanting to strengthen their borders with Russia offer business opportunities, Wadey said.

"That gives us a really significant opportunity to build effectively what some people are calling an Eastern shield of persistent surveillance to protect that border," he said.

Longer-term, as European countries in NATO seek to build their military industrial base, they will need the expertise of technology-focused companies such as QinetiQ, Wadey added.

QinetiQ also announced a 1.54 billion pounds ($2.07 billion), five-year extension to a Long Term Partnering Agreement with the U.K. Ministry of Defence for test and training services.

As part of the deal, which will now run until 2033, QinetiQ tests a number of military technologies including drones and directed energy weapons, and trains the U.K. armed forces in their use.

While the renewal was widely expected, its extension should ease any concerns surrounding the contract, Shore Capital analyst Jamie Murray said.

Shares in QinetiQ rose 5.3% in mid-morning trade at 4.63 pounds. The stock has advanced 11.5% year-to-date.

QinetiQ, which had lowered its outlook in March, on Thursday posted an operating loss of 90.5 million pounds for the year ended March 31, down from a profit of 192.5 million pounds year-on-year, according to preliminary statutory results.

This was due to a number of factors including restructuring costs and the impact of its legacy U.S. operations, it said.

On Thursday, QinetiQ also reported a net loss of 185.7 million pounds, down from a net profit of 139.6 million pounds in fiscal 2024.

Revenue grew to 1.93 billion pounds from 1.91 billion pounds on year, while the order intake reached a record level of 1.95 billion pounds, up 12% on the comparable period.

For fiscal 2026, QinetiQ expects revenue growth of about 3% and earnings per share growth to be between 15% and 20%.

Thursday's update will restore a bit of confidence in the technology-focused company, Russ Mould, investment director at AJ Bell said, but warned that there is still "a real sense QinetiQ is being left behind by its peers who have notably more positive outlooks."

"To avoid coming under pressure, longstanding CEO Steve Wadey will likely need this to change in future updates," Mould added.

The board proposed a dividend of 6.05 pence, taking the total dividend for the year to 8.85 pence.

Write to Cristina Gallardo at cristina.gallardo@wsj.com

(END) Dow Jones Newswires

May 22, 2025 05:49 ET (09:49 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.