Defence firm Chemring could lose millions after factory death
Defence firm Chemring Group could lose millions after an employee was killed following an explosion at its factory.
A 29-year-old man died on Friday and another man was taken to hospital in a serious but stable condition after a fire broke out at Chemring Countermeasures (CCM) facility in Salisbury, Wiltshire Police said.
The incident occurred in a building used to manufacture anti-missile flares.
Chemring Group said production at the site had been suspended and a detailed analysis of the financial impact had already begun.
It said that while the full impact on its 2018 and 2019 financial years could not be quantified at this stage, its underlying operating profit this year could be £10m-20m lower than expected.
A statement from the company said: “The impact on our 2018 and 2019 financial years cannot be accurately quantified at this stage as it will be dependent on insurance recoveries, the timeline for the investigation to be completed and the site to re-open, remediation work to be completed and at what rate production resumes.
“CCMs deliveries to customers in the final quarter of the financial year ending 31 October 2018 were previously expected to be £25m and to generate a contribution of £15m and the groups FY18 underlying operating profit is now likely to be approximately £10m – £20m lower than previous expectations, with a corresponding impact on the groups operating cash flow and net debt.”
The ammunition manufacturer, which specialises in military gear such as anti-missile flares and landmine detection technology, reported a five per cent rise in profits earlier this year due to increased defence spending by the US government.
It has also won large contracts in the Middle East that boosted profit growth.
The group, which said its thoughts were with the families at this time, said it would provide a further update in its next trading statement, which is expected on 4 September.
Wiltshire Police and the Health and Safety Executive have launched an investigation into the cause of the incident.