Killer blast at UK military site set to hit profits at Chemring

An explosion at a UK military hardware factory that killed one man and left another badly injured is set to inflict a big hit to the profits of Chemring, the site’s operator.

The blast occurred in a flare manufacturing building at the Chemring Countermeasures (CCM) facility near Salisbury, in Wiltshire, on Friday afternoon.

A 29-year-old man was pronounced dead at the scene while a 26-year-old man was taken to hospital where he remains in a “serious but stable” condition and is receiving specialist care.

Wiltshire police said the incident was contained and that there was no risk to people in the local area. A full investigation has been launched into the cause in co-operation with local regulatory authorities.

The blast caused damage to parts of CCM’s manufacturing operations and production at the site has been suspended.

Chemring said the financial impact for this year and next could not be “accurately quantified” at present, as it would depend on factors such as insurance claims, the completion of the investigation, remediation work and the facility’s reopening.

However, the company added that its underlying operating profit this year is now likely to be £10m-£20m lower than a previous expectation of around £55m. There would also be a “corresponding impact” on its operating cash flow and net debt.

Chemring supplies products including ammunition, anti-missile flares and surveillance systems, with about 2,500 employees in four countries. Not long ago, the company said it expected to gain from higher US defence spending.

The FTSE 250 group reported pre-tax profit of £4m on revenue of £547.5m in its previous financial year. It has undergone a restructuring following a difficult period, during which orders for its wares dropped following the end of large-scale deployments in Iraq and Afghanistan”.

Chemring’s CCM subsidiary had been expected to make £25m worth of deliveries to customers in the final quarter of the group’s financial year, which ends on 31 October. The company said it will provide a further update at a trading statement in September.