13th Aug 2018 09:31
LONDON (Alliance News) - Chemring Group PLC on Monday warned on its annual profit after a fatal accident at a factory in Salisbury on Friday.
Shares in the company were 16% lower on Monday morning, trading at 199.00 pence each.
The military equipment company said the worker was killed, and another "badly" injured, at its flare manufacturing building on its Chemring Countermeasures facility.
The incident, Chemring continued, damaged some equipment, and production is now temporarily halted.
Chemring has started an investigation into the accident, as well as the potential financial ramifications. It said deliveries by Chemring Countermeasures had been expected to be GBP25 million in final quarter of Chemring's financial year, making a contribution of GBP15 million.
"The impact on our 2018 and 2019 financial years cannot be accurately quantified at this stage as it will be dependent on insurance recoveries, the timeline for the investigation to be completed and the site to re-open, remediation work to be completed and at what rate production resumes," Chemring said.
The company did say, however, that underlying operating profit for its financial year ending October is likely to be around GBP10 million to GBP20 million lower than previously expected as a result of the accident.
In its prior financial year, Chemring posted underlying operating profit of GBP55.4 million, 14% higher year-on-year.
The company said it will provide a further update on the matter when it releases a trading statement due on September 4.
Chemring Countermeasures is one of the company's three operating segments, the other two being Sensors and Energetics.
In its year ended last October, Countermeasures posted revenue of GBP134.8 million from GBP138.3 million the year before. Group revenue was GBP547.5 million, meaning the business makes up about a quarter of the company's entire reveue, with Energetics being the biggest segment.
The business makes military countermeasures such as flares to defend against missiles, and Chemring is currently working of the F-35 joint strike fighter jet programme.
Chemring released its interim results in June, swinging to a pretax profit of GBP4.3 million after a loss of GBP6.8 million a year prior. Revenue fell to GBP229.3 million from GBP249.6 million.
Underlying operating profit increased 5% to GBP18.1 million for the interim period.
Related Shares:
Chemring