Shares in Ultra Electronics Holdings PLC (LON:ULE) hit all-time highs today, with the defence contractor topping the FTSE 250 leader board after reporting a jump in 2016 profits thanks to better margins and strong order intake.
In late morning trading, Ultra shares were up over 6%, or 124p at 2,106p.
For the year ended December 31 2016, Ultra saw its reported pre-tax profit leap by 94% to £67.6mln, up from £34.8mln in 2015, as revenues rose to £785.8mln from £726.3mln.
The group’s underlying pre-tax profits increased by 6.9% to £120.1mln for 2016, up from £112.4mln the year earlier.
Ultra - which operates in the Aerospace & Infrastructure, Communications & Security, and Maritime & Land sectors - said revenues rose in all its three divisions, while its operating margin improved to 16.7% from 16.5%.
It added that its order intake in 2016 was 22% higher than the previous year, up over 10% on an organic basis, with its total order book worth £799.3mln, compared to £753.8mln in 2015,
The group hiked its dividend for the year to 47.8p, up 3.7% from the 46.1p paid in 2015.
US defence boost …
Ultra’s chief executive, Rakesh Sharma said: “Market analysis suggests a return to growth in the global defence sector, fuelled by expected higher defence spending under the new US Administration and increasing global tensions.
“However, the current six-month Continuing Resolution to US Federal funding will mean that some contract awards will move into the second half of 2017,"
He added: “We are committed to expanding our selected export markets through considered partnerships, although the timing of revenue will continue to be hard to forecast.”
In a note to clients, analysts at Investec Securities said: "We see room for further upgrades should US budget commentary convert into spend over the medium term.”
Repeating a 'buy' rating on the stock, they added: "For us, Ultra offers the best value in the UK Aerospace & Defence sector and is deserving of a re-rating."