Chemring has sounded the alarm over delays in government spending amid growing industry frustration over when promises made by Labour will be fulfilled.
The FTSE 250 defence group has been boosted by an increased focus on arms budgets but revealed a setback in its division that makes sensors used to detect threats such as missiles.
It comes as business grows increasingly anxious that, after promising to raise the defence budget, the Government needs to start making firm spending choices.
One industry source said that the ‘mood is very much: thanks for the promises, but where is the follow-through?’
It follows a broadside from the head of the Royal Navy, General Sir Gwyn Jenkins, over Labour’s failure to fund defence – leaving Britain on the brink of losing control of the North Atlantic to Russia.
Chemring, a £1.3billion company best known for making countermeasures to protect air and naval forces from missiles, has benefited like others in the sector from growing geopolitical tensions in the wake of Russia’s invasion of Ukraine.
Concerns: Chemring has been boosted by increased focus on arms budgets worldwide but revealed a setback in its division that makes sensors used to detect threats such as missiles
That has driven plans to increase defence budgets across Europe, especially given growing fears that the US under Donald Trump is less likely to come to the continent’s aid in case of attack.
Chemring’s results for the year to the end of October revealed a 31 per cent rise in pre-tax profits to £67.7million as revenues increased 2 per cent to £497.5million.
‘Global focus on defence spending continues to intensify, driven by questions surrounding US support for Nato, the conflict in Ukraine and the urgent need for Europe to rebuild its defence industrial base, and rising tensions across the Asia-Pacific region,’ it said.
However, the company said it had been ‘a weaker period for sensors and information due to short-term delays in UK government spending’.
Shares edged down 0.6 per cent, or 3p, to 477.5p. They are up by 47 per cent so far this year.
The comments on spending come after the sector’s hopes were raised earlier this year when Labour’s strategic defence review pledged an increase in the defence budget to 2.5 per cent of GDP by 2027 with an ambition to rise to 3 per cent in the next Parliament.
Yet many firms are frustrated that there was little in the way of detailed spending plans – which they hope will be set out imminently.
They fear that a lack of firm commitments will badly affect smaller and medium-sized enterprises that make up crucial supply chains for the industry. A defence source said that these firms are ‘bearing the brunt’.
A spokesman for industry body ADS said last night that the Government’s defence strategy announcements so far had
provided ‘welcome moments of clarity for our industry’, but added: ‘Action is urgently needed to deliver on the proposed roadmap for change for the defence enterprise.’
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