* Says management of investor expectations has been poor
* Year-end order book 760 mln stg, down 13 pct
* Shares rise as much as 5 pct on relief no further bad news
Nov 27 (Reuters) - British military equipment maker Chemring Group, which earlier this month issued its second profit warning in less than three months, said on Tuesday its 2012 performance had been "extremely disappointing" but its shares rose on relief that its year-end trading statement did not contain yet more nasty surprises.
Chemring, which makes flares, equipment to detect improvised explosive devices and mechanisms used in ejection seats, earlier this month cut its profit outlook by more than a quarter for the year to Oct. 31 due to contract delays and technical problems.
"Chemring's operational performance has been weak, and management of investors' expectations over the past year has also been poor," the company said in its first statement to the market since takeover talks with private equity firm Carlyle Group fell through in early November.
Chemring shares rose as much as 5 percent to an intra-day high of 242.5 pence. Up to Monday's close, the stock had halved in value from its January high of 463 pence.
"I think the shares have rallied a little bit on relief that there's nothing nasty that's new in there," said Paul Mumford, senior investment manager at Cavendish Asset Management, which holds 632,100 Chemring shares.
Edison Investment Research analyst Roger Johnston said the trading update was designed to clear the air for investors.
"This is an admission the group had got things badly wrong, in both performance and communication over the past year," Johnston said in an email.
Chemring disclosed in August that it was the target of a highly preliminary expression of interest from Carlyle, prompting investors to pile into Chemring shares.
Since then, investor patience has been tested by the profit warnings and repeated extensions to the Carlyle merger deadline.
Carlyle did not give a reason for not proceeding with a bid, but expressed frustration about the slow progress of discussions with Chemring.
In between the profit warnings, Chemring replaced Chief Executive David Price with Mark Papworth, who took over this month. There was no comment from Papworth in Chemring's trading statement.
Papworth has been credited with leading a turnaround at oil industry services company John Wood Group Plc.
Chemring ended the year with 760 million pounds ($1.22 billion) of orders, down 13 percent from a year earlier.
The company said defence spending in the United States, United Kingdom and Europe would remain under pressure as governments struggle to rein in budget deficits.
Chemring shares were up 4.35 percent at 239.52 pence at 1154 GMT.