Chemring CEO leaves as losses widen in "challenging" markets

24th Jun 2014 12:28

Shares in defence group Chemring fell on Tuesday after its Chief Executive Officer left with immediate effect as it posted wider half-year losses and admitted end markets remained "challenging".The group, which has appointed a new CEO, also cautioned that foreign exchange headwinds would continue to have an impact on its second-half performance though its outlook for the full year remained "broadly unchanged".Chemring confirmed the promotion of its Countermeasures Director Michael Flowers as its CEO, saying he had taken up the role with immediate effect. He has 13 years experience in senior management positions within the defence industry. In line with its expectations, revenue from continuing operations declined from £225.4m to £208.8m year-on-year, while underlying profit before tax dropped from £19.1m to £13.4m, and earnings per share fell to 5.4p from 7.4p. Net debt was reduced to £229.2m from £275.1m a year earlier.Chairman Peter Hickson said the group has made "important progress" in the period, re-focusing its operations and strengthening the balance sheet "to create greater flexibility to invest for growth". "As a result [of the European munitions business] we are now moving to a position where we can take advantage of the stronger platform that has been created," he continued. "The appointment of Michael Flowers, with his proven track record, both within the international defence industry and within Chemring, places us in a strong position to build on our world leading technologies and market positions in Countermeasures, Sensors & Electronics and Energetic Systems. "While end markets remain challenging and customer behaviour difficult to predict, we will continue to drive operational efficiencies. We are also pursuing growth opportunities, particularly in non-NATO and commercial markets." The group reported that its recovery programme had resulted in "sustainable" improvements in operational performance, with further improvements anticipated in the second half if it increases its resilience to the difficult market conditions. It explained that the US was still dominating its defence spending, accounting for around 40% of its global spend. It anticipates a slow recovery in spending from 2016 onwards. In Europe, defence budgets remained "very tight", but it has seen a "limited" recovery in demand for countermeasures in addition to a continued interest in advanced flare technology. The share price had fallen 9.88% to 187p by 13:08. NR