UPDATE 2-Defence firm Chemring warns on year profit
* Cites delays to contracts, technical problems
* Cuts FY EPS expectations by 13 pence
* Carlyle Group has Nov. 9 deadline to make offer for Chemring
* Shares fall to six-year low
By Rhys Jones
LONDON, Nov 1 (Reuters) - British defence equipment maker Chemring cut its full-year profit guidance by more than a quarter after it was hit by delays to contracts and technical problems, sending its shares to a six-year low.
Chemring, which is in takeover talks with U.S. private equity firm Carlyle Group, reduced its earnings per share (EPS) expectations by 13 pence for the year to the end of October 2012.
The company said the award of an export licence for the supply of mortar systems for a Middle Eastern customer, which it had expected to receive in 2011/12, would drag on into its new financial year and that another contract it expected to be awarded last year had been delayed.
It also said technical problems with one of its products had led a customer to push back an order until a later date.
"The financial year has just closed and full-year results are not yet known ... as a result of these three issues, the group has reduced its expectations for its earnings per share for the financial year ended 31 October 2012 by 13 pence," the company said in a statement.
Prior to Thursday's statement, Chemring, which makes defence equipment such as flares and explosive device detectors, was expected to report an average EPS of around 43 pence for the year, according to a poll of five brokerages.
Chemring shares dropped to 252.6 pence in early trade, their lowest level since August 2006. The stock was 16.5 percent down at 261.6 pence by 0845 GMT, valuing the company at around 518 million pounds ($834.53 million).
The stock has shed more than a fifth of its value in the last three months after seeing profit fall and uncertainty over the Carlyle bid.
The U.S. private equity group is required to make an offer for Chemring or walk away by Nov. 9.
"Carlyle has until next Friday to make a formal offer. Even if they do, the price looks likely to be lower now," said Liberum Capital analyst Ben Bourne who cut Chemring's EPS target to 34.3 pence.
Last month Chemring surprised the market by announcing that chief executive David Price would step down immediately,
Price was replaced with Mark Papworth, a former executive at oil industry services company John Wood Group, where he was credited with leading a turnaround, leading analysts to speculate that the Carlyle deal was on the brink of collapse.
Chemring issued a profit warning in August, less than two weeks after receiving a preliminary expression of interest from Carlyle.
The company is due to publish its full year results on Jan. 24, 2013.
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