(Reuters) - The boss of Ultra Electronics Holdings (ULE.L) quit on Monday after Britain’s government scaled back its business with the defence contractor, sending its shares tumbling 19 percent.
Funding pressure on the Ministry of Defence has forced it to pause, cancel or delay several programmes and “within the last few weeks a number of our UK orders budgeted for 2017 have been affected,” Ultra Electronics said.
The company, which makes military electronics for land, air and sea forces, said it expected revenue and operating profit to fall this year. In March it had forecast “further progress” in its results.
It said Chairman Douglas Caster will step in to manage the company as executive chairman until a replacement for Chief Executive Rakesh Sharma is found.
Ultra Electronics revenue has risen 11 percent since Sharma took the top job in 2011 but business prospects have taken a knock since Britain’s vote to leave the European Union and last year’s U.S. elections.
Last week it said it expected a delayed decision from the U.S. Department of Justice (DoJ) on its $234 million (£179 million) purchase of Sparton Corp SPA.N.
“For Ultra to be valued properly it needs to start delivering against expectations on a regular basis,” Investec analysts wrote in a note. “The change of leadership provides a catalyst for a change in sentiment backed up by strong order intake and robust cash generation.”
Ultra forecast full-year revenue of 770 million pounds, below the 785 million pounds it reported last year, and expects organic revenue to fall about 4 percent.
It saw annual underlying operating profit falling to about 120 million pounds from 131.1 million last year.
Reporting by Hanna Paul in Bengaluru; Editing by Sunil Nair and Tom Pfeiffer