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Chemring profits fall on delayed US orders
HAMPSHIRE defence giant Chemring reported a fall in profit for the first six months of the year, hit by delays in US orders.
Underlying pretax profit fell 21 per cent to £39.2m, largely due to a delay in the US Government’s awarding a £360m million contract to NIITEK, a mine detection subsidiary.
Whitely based Chemring, best known for making flares and other countermeasures, said revenue from continuing operations was up 4 per to £333.3 million for the first half of the year to the end of April.
The firm, which employs 4,000 people, said its order book was up 14 percent at one billion pounds since October 2011.
Dr David Price, Chemring Group Chief Executive, said it was a record and remained “ the best leading indicator” of future growth.
He added: “The second half has started well, with trading in May up over 50 per cent year-on-year. The board is confident that the Group will deliver a strong second half trading performance, with increased operating margins that will enable us to meet our full year expectations.”
Chemring has seen its share price halve over the past year to value the company at £600 million after it issued a profits warning and said it would be hit by weaker defence spending and delays to orders.
Analysts fear the company is facing a tough time as Nato forces are gradually withdrawn from Afghanistan, while the US - the world's biggest military spender - has capped spending in 2012.
And because its products, which include flares and decoys for helicopters and aeroplanes, are small and quick to replace, they can be easily run down by Governments looking to tighten their purse strings.
It is trying to compensate for the squeeze in its western markets by selling more products to emerging economies such as Brazil and India.
The company has already closed a plant in the US and is considering closing two more in the country.