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Chemring ditches chief executive as losses soar | |
(about 20 hours later) | |
The military-equipment maker Chemring has sacked its chief executive, Mark Papworth, after the group was hit by a £72m pre-tax loss in just six months. | |
US and Nato spending cuts, coupled with armed forces withdrawal from Afghanistan, have badly hit the 109-year-old company, best known for designing ejector seats and decoy flares that can defeat guided missiles fired at aircraft. | |
This year's interim figures were even grimmer than the first half of last year, when pre-tax losses were only £9.2m. Its revenues were down 6.7 per cent to £277.4m and the interim dividend slipped from 3.4p to 2.4p a share. | |
In a stinging rebuke, Chemring's chairman, Peter Hickson, said the business would be better served by a chief executive who had "a different set of skills" – particularly knowledge and understanding of the defence markets "in which we operate". | |
Mr Papworth lasted only 20 months on the frontline, during which time the defence group's shares have fallen by more than a third. He has been replaced with "immediate effect" by Michael Flowers – the former head of Chemring's Australian business and countermeasures group director. | |
Mr Flowers has been rewarded for handling the recent sale of the FTSE 250 group's European munitions business for £134.5m to Nexter Systems of France. He previously worked with Europe's biggest defence contractor, BAE Systems, and served in the Australian army for 22 years. | |
Chemring's countermeasures division was hit by a fatal accident at its Kilgore plant in the US, which led to production being halted for an investigation. Revenues fell by 24 per cent to £43.5m and operating profits sank 70 per cent to £1.5m. | |
Mr Hickson said: "We are now moving from a period of critical and significant change to one where we must take maximum advantage of the stronger platform that has been created." | |
Globally, defence spending is not expected to recover until 2016, though the small South American market is growing. | Globally, defence spending is not expected to recover until 2016, though the small South American market is growing. |
Ben Bourne, an analyst at Liberum, warned: "End markets remain challenging and customer behaviour difficult to predict." | |
Shares in Chemring fell 17.5p, or 8 per cent, to 190p. |