Chemring says 2012 performance "extremely disappointing"

Tue Nov 27, 2012 3:10am EST

Nov 27 (Reuters) - Military equipment maker Chemring Group said its performance over the year had been "extremely disappointing" and that it was trading in line with the expectations it laid out early this month.

At the time, Chemring had issued its second profit warning in less than three months, cutting its full-year profit outlook by more than a quarter after it was hit by delays to contracts, and technical problems.

"Chemring's operational performance has been weak, and management of investors' expectations over the past year has also been poor," the company said in its first statement to the market since takeover talks with private equity firm Carlyle Group fell through.

Chemring, which makes flares, equipment to detect improvised explosive devices and mechanisms used in ejection seats, has had a difficult year.

The company disclosed in August that it was the target of a highly preliminary expression of interest from Carlyle, prompting investors to pile into Chemring shares.

However, since then the company's stock has slid 45 percent as investor faith was tested following two profit warnings and repeated extensions to the Carlyle merger deadline.

The company last month replaced Chief Executive David Price with Mark Papworth, credited with leading a turnaround at oil industry services company John Wood Group Plc, indicating Chemring was preparing for life as an independent company.

Carlyle eventually decided to walk away from buying the company after trying to reach a deal for nearly three months, saying the situation with Chemring had gone on long enough.

The company's shares were up 5 percent at 240.3 pence at 0807 GMT on the London Stock Exchange.

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