Chemring shares hit six-year low as it slashes its forecast

SHARES in defence equipment firm Chemring fell to a six-year low yesterday as it cut its full-year profit guidance.

The firm, which is currently in talks with US private equity group Carlyle over a takeover bid, reduced its expectations for earnings per share by 13 pence, for the year to October.

Delays to a contract supplying vehicle-based mortar systems in the Middle East as well as delays to an aircraft order weighed on profits. Technical issues with one of its products will also hurt full-year numbers for Chemring, which issued a profit warning in August.

Carlyle, which first expressed interest in Chemring in August, has until 9 November to table an offer for the British company.

Last month, Chemring replaced chief executive David Price with Mark Papworth, a former executive at John Wood Group, with immediate effect, to better prepare the company for its future.

Roger Johnston, analyst at Edison Investment Research, said yesterday: “With the deadline for Carlyle’s bid rapidly approaching yet again, shareholders face the decision either to accept a likely ever-decreasing offer from Carlyle or put their faith in the new chief executive and sit tight for a potential turnaround.”

Chemring shares closed down 16.61 per cent yesterday at 262p.