The budget squeeze affecting governments across Europe has hit revenues at Chemring.
The defence company, which makes explosive countermeasures for aircraft, said that contracts were taking up to three months longer to be awarded as governments scrutinised spending more closely. Sales in Britain and on the Continent were down 25 per cent to £72.7 million in the six months to April 30.
Chemring said that many of the delayed contracts would be awarded in the second half of the year and it was confident it would meet full-year forecasts.
However, investors took fright at the potential impact of defence spending cuts and the company’s shares fell 199p to £31.11, making it the third-biggest faller in the FTSE 250 .
Outside Europe, Chemring delivered strong growth, with sales in America rising 33 per cent to £141.8 million. Total revenues across the group were up 10 per cent at £255.9 million, while profits before tax were down slightly at £25.3 million.
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The company, which also makes munitions and explosives, was able to increase its interim dividend by 21 per cent to 17p.
One particularly strong area of new business for Chemring is supplying vehicle-mounted radars capable of detecting roadside bombs and hidden improvised explosive devices.
Chemring said that the US Army had placed an order for 76 of its Husky Mounted Detection Systems. in addition to the 80 that the United States operates. The value of the contract is $106 million initially, rising to $217 million. The US has also expressed an interest in acquiring a further 600 HMDS vehicles, which could be worth some $1.5 billion to Chemring.
The Army does not use HMDS, but Chemring is developing a handheld version for the Ministry of Defence.
Chemring also announced that Peter Hickson would become chairman from October, replacing Ken Scobie, who is retiring.