Chemring, the maker of systems that help the army detect and safely blow up roadside bombs, has slipped into the red as the US withdraws from Afghanistan.
Investors were hit by a six-month loss of £8.8m against a pre-tax profit of £19.7m in the first half of 2012. Turnover was down almost 10 per cent, although a costly reorganisation is expected to result in savings from next year.
Its chief executive Mark Papworth warned the outlook was "towards the lower end of expectations" for the remainder of 2013. Heavy defence spending cuts in the US are taking their toll across the industry, while Chemring added that the global market will be "constrained" for another two years.
The group thinks the US defence budget will be slashed by 10 per cent by 2017.
Chemring will shut administrative offices in London, Derby, Washington and Philadelphia by October. The closures are expected to reduce the corporate head count by 40 per cent.