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Chemring fires CEO Mark Papworth after huge losses | |
(35 minutes later) | |
Military equipment maker Chemring has fired chief Mark Papworth after the group was rocked by a £72 million pre-tax loss in just six months. | |
US and Nato spending cuts, coupled with armed forces withdrawal from Afghanistan, have badly hit a 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 £9.2 million. Revenues were down 6.7 per cent to £277.4 million and the interim dividend slipped from 3.4p to 2.4p a share. | |
Chairman Peter Hickson said that 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”. | |
Papworth lasted only 20 months on the frontline. He has been replaced with “immediate effect” by Michael Flowers — former boss of Chemring’s Australian business and countermeasures group director. | |
Flowers has been rewarded for handling the recent sale of the group’s European munitions business for £134.5 million. 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 24 per cent to £43.5 million and operating profits sank 70 per cent to £1.5 million. | |
Chairman Peter 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. |
Shares fell 13.5p, or 7 per cent, to 194p. Liberum analyst Ben Bourne warned: “End markets remain challenging and customer behaviour difficult to predict.” | |