11th Oct 2013 06:37
LONDON (Alliance News) - Chemring Group PLC Friday joined BAE Systems PLC in warning that the US government shutdown is hitting its US business and operations, as it warned of a GBP8 million operating profit hit from this and other issues.
The defence technologies company also warned that its performance in its next financial year is likely to be worse than the current year due to continuing difficult market conditions.
In a trading statement, the company said it doesn't yet know the full impact of the US government shutdown, but its order intake in October will be hit, as will deliveries to the US Department of Defense in the last few weeks of its fiscal year.
Earlier this week, British defence giant BAE Systems said it hadn't been materially hit by the US government shutdown yet, but would be if it is protracted. Since the October 1 shutdown, BAE has told about 1,200 of its staff in its Intelligence & Security and Support Solutions businesses not to report to work.
On top of the US shutdown problems, Chemring warned that its Kilgore flares business is still experiencing quality and production issues, meaning overall revenues will be down.
The sterling-dollar exchange rate has also gone against it, reducing the value of sterling profits earned in the US.
"The board's current view is that these factors will impact this financial year's operating profit by approximately GBP8 million," it said.
It also said that 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 its next financial year. It said it was continuing to closely manage its cash and working capital.
Chemring did have some positive news. Its UK subsidiary, Chemring Countermeasures Ltd, has been awarded a significant countermeasures contract from a Middle Eastern customer, it said, adding that revenues and profits from the deal will be recognised in the current year.
"Early indications, given the continuing difficult market conditions, are that full year 2014 performance is likely to be less than the anticipated current year outturn. We will outline the initial findings of this process in a post close trading statement, which is expected to be released in November 2013," it said, referring to a comprehensive planning and detailed budgeting process it is undertaking.
By Steve McGrath; [email protected]; @SteveMcGrath1
Copyright 2013 Alliance News Limited. All Rights Reserved.
Related Shares:
Chemring