Chemring soar as the defence group unveils plans to divest units

 

The bomb-detector maker Chemring has drawn up plans to sell off non-core units in a move the company hopes will boost both its finances and its flagging share price.

The group, which also makes signal flares and parts for ejector seats, said it had already identified the businesses it hoped to offload, but did not name them yesterday. It outlined the overhaul alongside a trading update, which revealed that sales had fallen 24 per cent to £185m in the fourth quarter as its order book shrank 8 per cent to £702m.

The chief executive Mark Papworth said: “Although the defence environment remains undeniably challenging, we continue to take the necessary steps to give Chemring a stable platform and rebuild shareholder value.

“These steps will be driven by the results of our strategic planning process that has crystallised our long-term objectives for the business, determined our strategy for the next three years and enabled a re-alignment of our portfolio.”

Shares in the company rose 18.6p – or 9.6 per cent – to 213p on news of the planned sales.

Mr Papworth has stamped his mark on Chemring since joining towards the end of last year, when the private-equity group Carlyle walked away from a takeover of the company and investors branded the group a “mess”.

Shrinking public-spending budgets have also hit the  company and last month the group said the two-week US  government shutdown and production problems at its Tennessee decoy-making plant were likely to trim its operating profits by £8m this year. The US accounted for about 47 per cent of Chemring’s £740m revenues last year. Analysts had expected the group to post operating profits of £76.6m this year.

Richard Curr, the head of dealing at Prime Markets, said: “We said back in June that Chemring is in need of some effective fundamental countermeasures of its own, as the company continues to mount a desperate defence across all areas of the business.

“That Chemring are making efforts to turn the business around and offload non-core business units is not in doubt, but this process must also be accompanied by sufficient progress to restore investor faith.”

Meanwhile, the defence services firm Babcock International confirmed yesterday it is in talks to buy a stake in Avincis, the world’s largest helicopter operator.

Avincis owns Bond Aviation Group in Britain and derives a large chunk of its revenues from ferrying oil workers to and from North Sea rigs as well as running search and rescue services. It is co-owned by Investindustrial, the Italian group behind Aston Martin. A deal would help Babcock tap into the lucrative defence markets of Spain and Italy.

Babcock shares fell 41p to 1,284p yeterday as the market digested the news.

John Lawson, an analyst at Investec, said: “After the strong run up in the stock price and given some strategy uncertainty, we prefer to sit on the side lines until there is clarity.”

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
News
ebooksNow available in paperback
Life and Style
tech
News
The 67P/CG comet as seen from the Philae lander
scienceThe most important scientific breakthroughs of 2014
Arts and Entertainment
Ian McKellen as Gandalf in The Hobbit: The Battle Of The Five Armies
film
Arts and Entertainment
Sarah Koenig, creator of popular podcast Serial, which is to be broadcast by the BBC
tvReview: The secret to the programme's success is that it allows its audience to play detective
News
Ruby Wax has previously written about her mental health problems in her book Sane New World
people
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Ashdown Group: Java Developer - Hertfordshire - £47,000 + bonus + benefits

£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...

Ashdown Group: Direct Marketing Manager - B2C, Financial Services - Slough

£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas