Chemring revenues hit by sequestration in third quarter

28th Aug 2013 07:08

Chemring, the manufacturing company serving the defence markets, saw a sharp year-on-year decline in revenue in the third quarter as it continues to feel the effects of automatic spending cuts in the States.Revenue totalled £142.8m in the three months to July 31st, down 13.5% from the £165.1m reported for the same quarter of 2012. The company said this decline was as expected and full-year targets still remain in line with market forecasts."Revenue levels reflect the ongoing deterioration in defence spending within our NATO markets and delays in order placement by customers in each of our geographic markets," the company said.It said indications from the US Department of Defense (DoD) suggest that all product orders will be delayed due to sequestration, continuing resolution and budget management. Chemring's order book at the end of July stood at £747.8m, up 6.7% from the second quarter but well below the £909.9m reported at the same time last year.The company said it is starting to see improvements in operational efficiency and responsiveness as benefits from its Performance Recovery Programme set out in January begin to come through. It has started a "comprehensive planning process" that will result in a set of strategic objectives for the next three years.Chemring said: "Governments' budget uncertainties and a lack of visibility will continue to impact confidence in the group's markets, as order placement decisions are delayed. "However, the quality of Chemring's operations is improving as a result of the Performance Recovery Programme, and we remain focused on driving further enhancements in operational performance and restructuring the business to provide greater resilience."BC