Ricardo plc plans to sell defense business to focus on environmental consulting

LONDON – Ricardo plc, a global strategic and environmental consulting firm, has announced its intention to divest its Defense business, which is part of its ‘Established Mobility’ portfolio. The move aligns with the company’s five-year strategy, revealed in May 2022, to become a leading consultancy in environmental and energy transition. The Defense unit, known for its engineering and production services for land vehicles in the defense sector, has recently performed well financially. This is partly due to a significant extension contract awarded in September 2023, worth $385 million, for the supply of Antilock Brake Systems (ABS), with deliveries extending to September 2027.

The potential sale, however, is expected to be dilutive to Ricardo’s earnings per share in the short term. The company’s board will decide on the use of proceeds from the sale in accordance with its capital allocation policy. Ricardo is also considering reinvesting the proceeds into the environmental consulting market through potential acquisitions that would support its strategic shift and potentially be earnings accretive.

The CEO of Ricardo, Graham Ritchie, stated that selling the Defense business would allow Ricardo to concentrate on growing as a leader in environmental and energy transition markets. He also noted that the divestment would enable the Defense business to maximize its potential, especially with the development of new programs for the US Army, for which it has already received initial funding.

Ricardo is a publicly listed company on the London Stock Exchange with over a century of engineering expertise and nearly 3,000 employees across more than 20 countries. The firm specializes in delivering sustainable outcomes across various sectors, supporting energy transition, environmental services, and providing smart transport solutions.

As the company pursues the divestment of its Defense business, it has made clear that there is no certainty that the divestment or any subsequent acquisitions will occur. This announcement is based on a press release statement from Ricardo plc.

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