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I have to say i agree with your point of view, this is a hiccup but nothing more than one would expect with the nature of what is being manufactured and indeed with the level of upheaval we have seen in certain geographies. Personally i think it is a way of softening is up for a lower offer, nothing more. I sold out of Rio yesterday and topped up at 2.62 wondering whether i should have bought more......
Defence contractor Chemring reduced profit expectations for the financial year ended October 31st 2012 following delays and technical problems in a number of contracts. In an update on current trading Chemring said a contract for the supply of vehicle based mortar systems for a Middle Eastern customer was experiencing delays in the granting of export licences for a limited number of parts. This delay the group believes is unlikely to be resolved in the near term and will continue into its new financial year. Meanwhile, the group which makes pyrotechnics, explosives, munitions and countermeasures, said the receipt of a multi-year contract for the supply of aircraft countermeasures to a customer in the Middle East is now expected to be placed in its new financial year rather than the current. Furthermore technical problems on the development of a countermeasure have resulted in the product not being accepted by the customer until further acceptance tests have successfully taken place, it explained. As a result of these three issues, the Chemring has reduced its expectations for its earnings per share for the financial year ended October 31st 2012 by 13p. Chemring said it would provide a further update on trading.
This is a defence company. It's scrutinized more than an engineer like Lamprell whose operations are outside of the UK, and hence inspecting their looks outside Whitehall;'s jurisdiction. The sector difference here does make a 'difference.' But it was a good point you made.
Whilst a different sector, it does remind me of what's happened/happening at Lamprell. So my instinct tells me there's more bad news to come as new people come in and start inspecting the pipeline of deals and profitability further. The bogey here is whether today's announcement, and no doubting its truth, whether indeed helps prepare the market for a lesser than originally anticipated bid from Carlyle. If this scenario comes off then perhaps a bid of £3.30 to £3.50. Anyone agree/disagree?
Thats the way I read it too. The business & contracts are there, they just are just delayed or just need a few changes to the product and service that hopefully the new CEO will manage to implement!
I would hardly regard this news as a 'profit warning'. Each of the three issues is little more than a delay.So expected profit for this year has been reduced, but it will likely just be added to next years expected profit.
I have been watching CHG since the bid rumours arose. It is hard to say what will happen next, it would have been better if this profit warning came at the same time as the CEO's departure, now we are all wondering what else is lurking in the background. The really bad news is the technical problem that the company can't see being fixed soon, nobody wants to buy a product that doesn't work. Until that issue is resolved I would not invest, the takeover parties have it in their interest to delay their hand, the price is likely to drift lower and if they still want it they can get it even cheaper. All just my opinion of course so good luck if you are tempted to buy, you may always be right.
Both!
It would be interesting to know which Middle Eastern country these mortars were to be supplied to. Was this contract signed before the Arab Spring to a country that the West now will not deal with? Or did Chemring foolishly sign a contract to supply an Arab country without first checking on the export license issue?
I think this dip is an opportunity and not a true reflection of company performance. Any thoughts from anyone regarding further price falls if bid now fails to materialise?
Chemring Group PLC ("Chemring" or "the Group") today provides a statement on current trading at the closing of its financial year ended 31 October 2012. While the financial year has just closed and full year results are not yet known, three issues have been identified that will reduce our expected profits and earnings per share for the full year. These are: · A contract for the supply of vehicle based mortar systems for a Middle Eastern customer. Delays in the granting of export licences for a limited number of parts are unlikely to be resolved in the near term and will continue into our new financial year. · Our expectations assumed the receipt of a multi-year contract for the supply of aircraft countermeasures to a customer in the Middle East. Despite extensive negotiations with the prime contractor the order is now expected to be placed in our new financial year. · Technical problems on the development of a countermeasure have resulted in this product not being accepted by the customer until further acceptance tests have successfully taken place. 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 Group will provide a further update on trading in due course, and the Group's preliminary results are expected to be announced on 24 January 2012.
does the exit of Dr Price (CEO) mean the bid will go ahead or does it mean it wont go ahead ?? press comments seem to suggest that it means the bid will not go ahead now: BUT no comment from both parties and no news in this instance could be GOOD news: its nearly a week since the CEO went and the bid is still alive: did the carlyle group insist on him going before progressing with the bid ? it does make you think: obviously press comments are from journalists with a lot more knowledge of share dealing than me but as an 'enthusiastic amateur' it strikes me that the bid would have been pulled before now if it was a total 'no no': why wait a week after the CEO goes without a withdrawal announcement ? i might be totally wrong but it seems strange to say the least: the suspense is intolerable !!
I wonder if Carlyle or Woodford had any influence in this resignation after possibly finding some alarming things in the accounts or would it be reasonable to assume that Carlyle would install their own man after a formal takeover?
David Price, the Chief Executive Officer (CEO) of FTSE 250 defence group Chemring has resigned with immediate effect, the company announced on Tuesday morning. Chemring, which makes pyrotechnics, explosives, munitions and countermeasures, has appointed Mark Papworth, a former Wood Group executive, as Price's replacement. Price has been Chemring's frontman since 2005 and has overseen the company's promotion to the FTSE 250. Meanwhile, Papworth worked at FTSE 100 firm Wood Group as the CEO of its Gas Turbines Services division from 2005 and was also an executive director on the board from 2006. "His career has covered high technology, service and manufacturing companies serving aerospace, energy and infrastructure markets. During his tenure at Wood Group he implemented and delivered a strategic review which resulted in a successful turnaround, improved manufacturing capabilities and substantial improvements in profitability," Chemring said. Papworth also held senior positions at Rolls-Royce and Alstom Power.
It's not over till the fat lady sings...... Nothing is ever straightforward....... I think we have a few more twists to this, I'm staying in, bought at 329p
If the price drops anymore then it may make them stay at the table to grab a bargain....!
Considering topping up here but with the merger still a ? - does anyone else think this could drop below £3??
A counter bid from an industry buyer was unlikely and negotiations were likely centred on price, said Edison Investment Research analyst Roger Johnston. He said a price around 400 pence per share, a premium of 19 percent to Thursday's closing price, would be enough to clinch the deal. That would value the company at 773 million pounds. "Carlyle will feel under no pressure to bid high while Chemring management will not want to go out with a whimper so this will be a finely balanced negotiation," Johnston said.
It looks like we will have to wait another month for any decision: Following is an article fro FT: October 11, 2012 11:31 pm Chemring extends Carlyle takeover talks By Anousha Sakoui and Carola Hoyos Chemring, the defence group, is set to continue talks with US private equity fund Carlyle about a potential takeover. A deadline for the fund to present a firm bid expires on Friday but will be extended to allow Carlyle to continue negotiations, according to people familiar with the situation. Unless there are last-minute changes, Chemring is expected by those involved to take the full 28 extra days allowed under UK Takeover Panel rules. The extension would be the second to be granted after Carlyle’s “highly preliminary expression of interest” was revealed in August. However, since then, the London-listed defence group has seen its share price fall after announcing that full-year operating profits would be £15m lower than forecast. It blamed the profit warning on an IT problem at a Florida subsidiary as well as on delays to the production of its latest anti-landmine device. Having peaked at 414.7p after Carlyle’s interest was first revealed, Chemring’s shares were down to 335.3p on Thursday. But one of the people familiar with the situation said that although private equity takeovers of public companies can be fraught with difficulties, Chemring would not be pursuing talks if it did not believe a deal could be struck. The Hampshire-based group has struggled in recent years as demand for its products, including bomb disposal equipment and counter-measure flares, has sagged following the drawing to a close of the conflicts in Iraq and Afghanistan. Cuts in public spending are expected to affect defence procurement, particularly in the US. A delay in US orders dented Chemring’s bomb disposal business last year, an effect that could be exacerbated by putative plans to “sequester” defence spending from 2013. Before Carlyle’s approach, Chemring’s shares, at 313p, were trading on about 5.4 times forward earnings, compared with nearer nine times for its UK defence peers. The enterprise value of the company was just over four times its forecast earnings before interest, tax, deprec
it was good to hear your views on the chemring situation you seem to have a common sense and logical approach to share dealing and i really appreciate your views nothing announced over the weekend expect it'll go to the wire again its good that invesco approve as they are major stakeholder anything over £3.80 would put me in profit if nothing comes then like you say there's still the dividend...... and the euro millions lottery !! and a shroud has no pockets !!! good luck kieran
thanks again for your kind help i sold some chemring @ 3.60 a couple of weeks ago as a result of your kind advice still got about 15000 which will be great if a bid arrives but will knock me for six if carlyle dont bother oh for a crystal ball !!! whats your gut feeling about carlyle ? cheers
i was thinking of adding to portfolio of chemring shares after recent sales and just interested to know about your prediction of 4.50-4.80 bid and weekend announcement.. is this speculated anywhere that i could read up on please ? apart from carlyle are any other bidders in the picture at present ? thanks very much for kind help and best wishes
This excellent company, always a bid target, should announce the bid has been successfu, possibly over the weekend,...4.50 to 4.80 from carlyle and surely another bidder will step in for a bidding war. Even without any bid, GHG sp is cheap and remains a strong buy!
Still a good price though. Noted 'Chemring is a perennial takeover target......' on the Internet.