Chemring Group warns on performance

11th Oct 2013 07:01

Defence giant Chemring Group gave a mixed update on Friday morning, although by and large it is likely to disappoint. The only good news on offer was that its UK subsidiary, Chemring Countermeasures, has been awarded a "significant" contract from a Middle Eastern customer, the proceeds of which will - as the firm expected - be recognised in the current financial year. However, the group warned that its North American business continued to be affected by the US government shutdown and said the full impact was unknown - although it would have a definite impact on October order intake and deliveries in the US Department of Defense. The company also admitted that it has suffered a reduction in revenue as a result of quality and production issues, particularly at Kilgore, and will also suffer from an adverse move in the sterling/dollar exchange rate, reducing operating by around £8m. The 2014 full-year performance is expected to be less than the anticipated current year outturn, Chemring warned. In a statement the group explained: "At the interim results presentation in June, Chemring announced that it was initiating a comprehensive planning process which would give a better understanding of both the markets in which we operate and our business strategy for the next three years. "This is being prepared in conjunction with a detailed budgeting exercise for FY14. Early indications, given the continuing difficult market conditions, are that FY14 performance is likely to be less than the anticipated current year outturn. "Recent tensions in the Middle East have constrained the availability of shipping to the region and this will have a short term impact on cash receipts for certain munitions contracts until the first quarter of FY14. However, we continue to closely manage cash and working capital." NR