Chemring falls 8pc after disguised profit warning

INVESTORS are a sceptical bunch, and the City was clearly not quite convinced by

Chemring’s attempt to reassure the market yesterday.

The troubled defence contractor, which has equipment on the Curiosity Mars rover programme, said 85pc of its profit and 60pc of its revenue will be made in the second half of the year because of ‘planned and unplanned’ disruption at several of its sites.

Many in the City will have read the news as a veiled profit warning, despite Chemring also saying that its full-year expectations have not changed.

It is still suffering disruption to flare manufacturing operations following an explosion in Salisbury last August that killed one employee and injured another.

And it has now said that as well as a planned temporary closure to a plant in Australia, its sites in Tennessee and Norway both ‘experienced the failure of manufacturing equipment’.

Investors will find out the fullscale of the disturbances when it releases first-half results on June 5. Yesterday’s news sent Chemring shares down by 7.9pc, or 12.2p, to 142.8p last night.

A profit warning for engineering group Renishaw sent the FTSE 250- listed group’s share price down 11.2pc, or 470p, to 3730p.

Renishaw, which makes components such as robotic equipment that can be used in brain surgery, said it expects pre-tax profit to be £123m to £141m, down from £146m to £166m estimated in January.

It expects a slowdown in demand in Asia for its products to continue throughout the rest of the financial year.

AJ Bell investment director Russ Mould pointed out Renishaw’s previous profit stumbles were during notable global economic upheavals such as the 1997 Asian debt crisis and financial crisis between 2007-2009.

He said the latest could reflect a ‘slowdown in the smartphone market and the bloated inventories which have caused so much difficulty for silicon chip makers’.

Elsewhere on the FTSE 250 – where a lot of the headline corporate news was concentrated yesterday – shares in energy group

Enquest rallied as it said revenue and profit rose, and issued a confident outlook on production at its flagship Kraken field in the North Sea. Shares rose 11.3pc, or 2p, to 19.64p.

The FTSE 250 moved into the red yesterday, losing 0.21pc, or 41.40 points to 19,347.58, while the

FTSE 100, on the other hand, rose 0.88pc, or 64.30 points to 7355.31.

Legoland, Alton Towers and London Dungeon operator Merlin shed 5.5pc, or 20.2p, to 348.7p after Berenberg cut its rating to ‘Sell’ from ‘Hold’.

Analysts said they struggle to see the company achieving earnings growth in any division this year despite its cost-saving plan and investments in new sites and hotels – though they did say the company was ‘ priced for perfection’.

And Crest Nicholson shares fell 8.9pc, or 34.6p, to 354.2p after JP Morgan cut its target price for the housebuilder in a sector review note – from 440p to 400p. Crest shares also went ex-dividend yesterday, meaning its shares no longer qualify to receive the most recently declared payout.

Kier shares lost significant ground for the second day running after it posted a first-half loss of £36m on Wednesday.

Kier’s stock fell 7pc, or 30.2p, to 399.2p per share.

And finally, Diaceutics shares rose 15pc on its first day of trading on AIM.

Belfast-based Diaceutics, which provides data analytics services to big pharma companies, raised £17m at a placing of 76p – in the first float on AIM so far this year.

Shares rose 15.13pc, or 11.5p, to 87.5p.