New chief executives have a nasty habit of putting out profit warnings. But only eight days into the job, it is too soon to see the hand of Leo Quinn in the alert from QinetiQ, the defence electronics specialist.

Shares in the maker of bomb disposal robots and add-on armour for military vehicles — up 29 per cent since Mr Quinn’s appointment was announced last month — headed 8 per cent the other way as it warned of a slowdown in military procurement spending.

The Ministry of Defence, from which QinetiQ was spun off, remains its biggest customer, and the company complains that budgetary pressures have made the flow of consultancy projects that it normally picks up towards the March 31 end of its financial year more difficult to predict than usual. In America, which accounts for half of sales, QinetiQ says that its military products division is being squeezed by delays to the appointment of key personnel in the Pentagon (a hangover from a change of government) and continued uncertainty over US expenditure on the Afghanistan war.

Analysts cut their profit forecasts for this year and next by 15 per cent. Yet it is tempting to see QinetiQ’s problems as more than a temporary phenomenon — not least because none of the British companies that might be considered its peers, such as Cobham and Ultra Electronics, appears to be suffering the same effects. The difficulty in Britain is that QinetiQ works on the sort of defence projects that appear most susceptible to cuts or, rather, it is not on the multibillion programmes, such as the Astute submarine and Type 45 destroyer, the advanced development state of which makes them too hard to move. In America, the purple patch it enjoyed for nearly two years producing hi-tech hardware for war seems to be coming to an end.

The bind in both cases is that QinetiQ’s £452 million of borrowings provides an obstacle to further acquisitions — the traditional solution to slowing growth.

This is a puzzle for Mr Quinn, who might be expected to make disposals and seek cost-savings through tighter US integration. However, his track record at De La Rue, the bank note printer — where he generated £1 billion for shareholders in the space of four years — remains a powerful lure.

Tempus advised “buy” in March at 139¾p. But amid short-term uncertainty, at 163¾p, or 12 times earnings, it is not too late to sell.

WS Atkins

Keith Clarke, the chief executive of WS Atkins, has a reputation as one of the more cautious bosses among Britain’s consulting engineers.

Yet, only months away from a general election, and Atkins drawing two thirds of its work from the public sector and regulated utilities, yesterday’s half-year results found him in unusually upbeat form. With Mr Clarke confident that he should be able to keep next year’s profits broadly flat, against the double-digit percentage fall that the City had been expecting, shares in Atkins gained nearly 8 per cent.

True, the first-half numbers show it is weathering a construction downturn well. Operating margins were boosted by design work on the M25 widening scheme, and a big presence in Dubai is not hurting as much as expected: cost reductions through job cuts mean that profitability in the Middle East was little different from last year.

The company is not denying that the next few years will be tough: Atkins expects a “stop-start” pattern in many large infrastructure projects.

Rather, it contends that its expertise in growth areas (such as urban mass-transit schemes) and the steady emergence of new sources of revenue (notably new-build nuclear power and renewable energy) should enable it to withstand cutbacks elsewhere. So, too, should the company’s £231 million cash pile, which gives scope for acquisitions in new territories.

At 600½p, or nine times next year’s earnings, and yielding 4.6 per cent, buy on weakness.

Britvic

Pre-tax profits are up a better than expected 23 per cent, the dividend has increased an above-forecast 24 per cent and there are reported “signs of improvement” in British sales of soft drinks.

Yet shares in Britvic, the maker of Tango and R Whites lemonade, failed to fizz. Instead, they traded modestly lower as the stock market fretted that the self-styled consolidator of its sector is mulling a sizeable acquisition. That is no reflection of investors’ confidence in Britvic to find the right deal and pay the right price (despite the badly timed £170 million purchase of C&C’s soft drinks business two years ago).

Rather, it conveys the concern that, with a net debt of £366 million, an acquisition is likely to be accompanied by the issue of new shares. But if Britvic is judged on what it has done, rather than what it might, there is much to admire. All six of its biggest selling brands are taking market share, and, despite the drag from Ireland, operating margins continue to improve.

Robinsons squash has benefited from “trading down” from more expensive alternatives; Britvic is underrepresented in convenience stores, where sales have suffered relative to supermarkets; and J20 and its mixer brands fare well in food-led pubs, the best-performing part of the on-trade.

Britvic is also confident that it can carry on growing at about 5 per cent a year over the medium term — much in line with before.

At 370p, or less than 11 times earnings, and yielding 4.1 per cent, the shares trade at a 20 per cent discount to their European beverages peers. But until Britvic’s acquisition plans become clearer, that gap is unlikely to close. Hold.

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