21st Jun 2016 06:48
LONDON (Alliance News) - Chemring Group PLC on Tuesday said its pretax loss widened in the first half due to contract delays and a weaker sales mix despite higher revenue, prompting it to pull its dividend for the period.
The company, which makes countermeasures such as flares and decoys that military aircraft use against missile attack, as well as sensors and electronics used in military vehicles, said its pretax loss for the half to the end of April was GBP16.8 million, compared to a GBP15.1 million loss a year earlier.
Revenue for the half grew to GBP180.1 million from GBP161.7 million, up 11%, thanks to growth in all the group's operating segments. However, a lower-margin sales mix, phasing of revenue to the second half, and issues involved in the sale of ammunition to a customer in the Middle East, which was held up, hurt profitability.
That ammunition contract is now up and running, and initial revenue from the deal has been recognised, Chemring said. A substantial increase on this contract in the second half will increase the weighting of the group's full year to the second six months, and Chemring said it now anticipates its annual results will be slightly below market expectations.
The group's order book at the end of April was GBP591.6 million, up from GBP569.6 million at the end of October 2015, with more than GBP240.0 million set for delivery in the second half.
The tough conditions for the group, however, meant Chemring scrapped its interim dividend payout, having paid 2.4 pence per share a year earlier.
Chief Executive Michael Flowers acknowledged the hit taken by the group in the first half from the weaker sales mix and the delays on the ammunition contract, but said there is a "growing sense of momentum" in the business, even if it now sees its full-year results slightly missing market expectations.
By Sam Unsted; [email protected]; @SamUAtAlliance
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