Chemring Group, a defence company, would likely lose millions after an employee died due to an explosion at its factory.
Last Friday, Wiltshire Police said that a 29-year-old man died and another man was taken to hospital in a serious but stable condition after a fire broke out at Chemring Countermeasures (CCM) facility that is located in Salisbury.
The incident occurred in a building used to manufacture anti-missile flares.
Chemring Group said that the production at the site had already been suspended after the accident and a detailed analysis of the financial impact had already started.
It disclosed that while the entire impact on the company’s 2018 and 2019 financial years could not yet be quantified at this stage, its underlying operating profit in 2018 would likely be £10 million to 20 million lower than expected.
A statement that was released by the company stated: “The impact on our 2018 and 2019 financial years cannot be accurately quantified at this stage as it will be dependent on insurance recoveries, the timeline for the investigation to be completed and the site to re-open, remediation work to be completed and at what rate production resumes.”
It added: “CCM’s deliveries to customers in the final quarter of the financial year ending 31 October 2018 were previously expected to be £25m and to generate a contribution of £15m and the group’s FY18 underlying operating profit is now likely to be approximately £10m – £20m lower than previous expectations, with a corresponding impact on the group’s operating cash flow and net debt.”
The manufacturer of ammunition specialises in military gear including landmine detection technology and anti-missile flares. Earlier this year, it reported an increase of five percent in profits because of the increased defence spending by the government of the United States of America.
It has also won huge contracts in the Middle East that supported its profit growth.
The group said that its thoughts were with the families at this time. It said that it would provide additional updates in its next trading statement, which is anticipated on the 4th of September.
The Health and Safety Executive and Wiltshire Police have started an investigation into the cause of the incident.