UK defence giant takes big hit as budgets cut

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One of the UK’s biggest defence firms triggered a slump in its shares yesterday after revealing the impact of industry budget cuts on profits.

The Fareham, Hampshire-based company, which employs 4,000 people and is best known for developing missile-avoidance equipment used in the Joint Strike Fighter, said £37m of orders due in the last month of its financial year had slipped into the current year.

As a result, £14m had been wiped off gross profits in the year to October 31.

It admitted efforts by US authorities to cap spending over the next decade and deficit reduction programmes in Europe have “disrupted” procurement.

The group, which has operations worldwide, said its order book at its year-end was £878m, which is 12 per cent lower than it reported three months earlier and reflecting “widespread delays” in contracts.

Shares slumped 15 per cent after it also warned more delays are possible.

The group also makes ground penetrating radar to detect buried explosives and is an expert in pyrotechnics and explosives for the defence, security and safety markets.

Chemring’s Energetics division, which makes rocket motors, explosives and warheads, operates sites at Stevenston in Ayrshire and Corsham in Wiltshire.

A site at Poole makes bomb disposal equipment, including detonators and charges.

And its defence division, which runs a site at Draycott in Derbyshire, makes flares and grenades.