In­vestors dump de­fence group Ul­tra af­ter profit warn­ing

The Daily Telegraph - Business - - Business - By Alan Tovey

THE share price of de­fence group Ul­tra Elec­tron­ics plunged by al­most a fifth yes­ter­day as in­vestors re­acted to the com­pany’s chief ex­ec­u­tive be­ing ousted and a profit warn­ing late on Fri­day night.

It emerged af­ter mar­kets closed at the end of last week that the com­pany’s vet­eran chief ex­ec­u­tive Rakesh Sharma was leav­ing with im­me­di­ate ef­fect – news that was first re­ported by The

Daily Tele­graph. The de­ci­sion fol­lowed what the com­pany de­scribed as “a pe­riod of re­flec­tion” by the board on Ul­tra’s fu­ture.

The FTSE 250 com­pany also warned of “dif­fi­cult” con­di­tions in the UK de­fence mar­ket, which rep­re­sents about a quar­ter of the com­pany’s £785m an­nual rev­enue. As a con­se­quence, Ul­tra is­sued a profit warn­ing, pre­dict­ing full-year un­der­ly­ing op­er­at­ing profit of £120m, com­pared with mar­ket fore­casts of £132m, and that or­ganic rev­enue would de­cline by 4pc.

In­vestors di­gested the tur­moil at Ul­tra over the week­end and re­sponded by dump­ing shares as trad­ing be­gan yes­ter­day. They closed down 19.5pc at £12.30, a level last seen in 2009.

The de­cline wiped more than £200m off Ul­tra’s mar­ket value. Six months shares were trad­ing at more than £20 apiece.

Ul­tra has been strug­gling for some time, miss­ing growth tar­gets for the past four years, but has not been sin­gled out for dis­ap­point­ing in­vestors be­cause of wider prob­lems in the sec­tor. Other com­pa­ra­ble de­fence groups such as Chem­ring, and more re­cently Cob­ham, have pro­vided a smoke­screen for Ul­tra’s lack of per­for­mance. How­ever, th­ese com­pa­nies are now on the road to re­cov­ery, mean­ing in­vestors have switched their fo­cus.

Investec an­a­lyst Rami My­er­son said: “For Ul­tra to be val­ued prop­erly it needs to start de­liv­er­ing against ex­pec­ta­tions on a reg­u­lar ba­sis. The change of lead­er­ship pro­vides a cat­a­lyst for a change in sen­ti­ment and shows the board will­ing to act.”

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.