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Chemring shares fall on procurement cuts Chemring shares fall on procurement cuts
(about 7 hours later)
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Shares in Chemring, which makes systems for the Joint Strike Fighter, fell 14% after it announced that government spending cuts were disrupting orders.Shares in Chemring, which makes systems for the Joint Strike Fighter, fell 14% after it announced that government spending cuts were disrupting orders.
It said the US Budget Control Act and uncertainty in European budgets was leading to weaker defence spending.It said the US Budget Control Act and uncertainty in European budgets was leading to weaker defence spending.
The firm reported revenues of £745m for 2011 which were 25% higher than the previous year but 5% lower than expected.The firm reported revenues of £745m for 2011 which were 25% higher than the previous year but 5% lower than expected.
It predicted greater market uncertainty and potential delays to orders in 2012.It predicted greater market uncertainty and potential delays to orders in 2012.
Analysts reacted negatively to the news.Analysts reacted negatively to the news.
"[Chemring] points to some delays in order placement, both from the disruption to US procurement processes and also as a result of EU budgetary uncertainty. We expect to reduce our forecasts accordingly," said David Buxton, an analyst at FinnCap."[Chemring] points to some delays in order placement, both from the disruption to US procurement processes and also as a result of EU budgetary uncertainty. We expect to reduce our forecasts accordingly," said David Buxton, an analyst at FinnCap.
Shifting marketsShifting markets
Chemring makes a range of defence products from missile avoidance systems to radar for detecting buried explosives.Chemring makes a range of defence products from missile avoidance systems to radar for detecting buried explosives.
The firm said sales to Middle Eastern clients remained buoyant due to strong GDP growth in the region and sustained high oil prices.The firm said sales to Middle Eastern clients remained buoyant due to strong GDP growth in the region and sustained high oil prices.
Its medium-term goal is to have 40% of business coming from non-NATO markets.Its medium-term goal is to have 40% of business coming from non-NATO markets.
Chemring is based in Hampshire and employs 4,000 people.Chemring is based in Hampshire and employs 4,000 people.