HI-TECH defence firm Chemring, which employs hundreds of staff in Hampshire, has issued a profits warning as its business is hit by the shutdown in US Government.

With the bitter dispute over President Barack Obama’s budget continuing, the decoy firm confirmed it would see an £8m shortfall in the financial year – sending its shares plunging by more than 20 per cent.

The company, which employs 35 people at its headquarters in Whiteley and about 400 in Roke Manor Research in Romsey, relies on the US for nearly half of its business.

The company is renowned for making decoys fired off to confuse ground to air missiles as well as other counter-measures such as detected IEDs (Improvised Explosive Devices).

A Chemring spokesman refused to confirm whether the turmoil in the US would impact on the jobs in the UK.

A spokesman said: “The US Government shutdown that came into effect on 1 October 1 has resulted in the closure of a large number of Government departments and associated activities.

“This included the Defense Contract Management Agency (DCMA), the Government agency with responsibility for inspecting and approving products for delivery to the US Department of Defense (US DoD).

“While the majority of the DCMA’s civilian staff have now returned to work, other Government departments remain closed and this continues to affect Chemring’s North American business.

“The full impact of the US Government shutdown is not yet known but it will impact the October order intake and deliveries to the US DoD in the remaining few weeks of the financial year.”

The firm has also been hit by manufacturing issues in its US factory. To add to its woes, the exchange rate has moved adversely, slashing the sterling value of profits generated in the US.

The company’s board’s current view is that these factors will impact this financial year’s operating profit by about £8 million.