Chemring posts a loss of £8.8m as US cuts back on defence spending

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 £8.8 million against a pre-tax profit of £19.7 million in the first half of 2012. Turnover was down almost 10% although a costly reorganisation is expected to result in savings from next year.

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% by 2017.

Chemring will shut administrative offices in London, Derby, Washington and Philadelphia by October. The closures are expected to reduce the corporate headcount by 40%. The shares today fell 9% to 241.6p.