FTSE 250-listed Chemring’s shares jumped nearly 10 per cent yesterday, after the defence equipment maker outlined plans to sell off non-core assets in an attempt to turn around its finances.
The company, which makes defence equipment such as flares and explosive device detectors, said it had started a process to divest the assets, although it did not reveal which business units would be put on the block.
Chemring posted a 24 per cent decline in quarter-revenue to £185m compared to £242m the previous year.
The group’s order book by 31 October was approximately £702m, eight per cent lower than at the end of the previous financial year.
“These reductions reflect the significant budgetary pressures in Chemring’s core defence markets and order deferrals among the group’s non-NATO customer base,” said the company in a statement.
Issues regarding the US government shutdown in October – which may have had a ripple effect on the country’s economy, as well as businesses with US government contracts – have largely been resolved, Chemring said.
As previously announced, delays in deliveries to customers in the Middle East had a short-term impact on cash receipts and reduced operating cash inflow in the last quarter.
“That Chemring is making efforts to turn the business around...is not in doubt, but this process must also be accompanied by sufficient progress to restore investor faith,” said Richard Curr at Prime Markets.
Shares closed down 9.6 per cent.