4th Sep 2018 12:41
LONDON (Alliance News) - Defence and engineering firm Chemring Group PLC said Tuesday it was still assessing the impact of a recent fatality at one of its facilities, while trading remains in line with its expectations across the remainder of the business.
The firm added the employee who was injured in an incident in one of its countermeasure facilities in Salisbury, Wiltshire is still in hospital. Another employee died in the incident.
An investigation is still ongoing into what caused the incident on August 10, Chemring said.
The operating profit impact of the incident for the year ending October is now expected to be in the "middle" of the GBP10 million to GBP20 million range given shortly after the incident. The firm is currently engaging with its insurers.
In financial 2017, Chemring generated underlying operating profit of GBP55.4 million on revenue of GBP547.5 million.
The impact of the incident on financial 2019 is still being assessed, the company said. This will largely be dependant on the restart plan for the site. The firm is currently working with UK regulatory bodies on a potential restart plan which will begin with the shipment of finished goods.
News of the incident had sent shares 15% lower. Shares in Chemring were 2.4% higher at 202.00 pence on Tuesday, and despite the recent knock, still up 12% in the year to date.
For the four months ended August, the Countermeasures unit - which suffered the fatality - saw "positive" customer demand. This resulted in GBP78 million in order received, of which the majority were from the US government. This, Chemring explained, provides it with "strong order book coverage" for its financial 2019 year.
Chemring added its Sensors business had received several "significant awards" during the period.
Its Energetics unit - bullets and other projectiles - has seen demand "continue to soften", however. The firm is looking to move away from the "short-term commodity products" model to a "longer-term contracting and partnering agreements in higher-margin niche product areas". In these areas, demand is described as being "robust".
"Recent contract awards in our countermeasures and sensors segments demonstrate both continued customer demand and the progress the group is making on its roadmap to focus on higher margin, niche market positions where the group is best placed to generate future value," Chemring explained in a statement.
"With the exception of the impact of the countermeasures incident, trading across the group remains in line with the board's expectations," the firm added.
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