Almost a quarter of the Group's share price has been swiped with the news UK defence spending has slowed and its Chief Executive has left.
Companies: Ultra Electronics Holdings plc
Not good a good start to the week for Ultra Electronics (LON: ULE) today with the release of two RNS statements, one announcing that after 28 years with the Group Rakesh Sharma has stood down as CEO with immediate effect.
The resignation comes after a number of challenging years for the Company who provide electronics to the defence, security and transport industries.
Commenting on the directorate change, Douglas Caster, Executive Chairman said:
"While market conditions have been more challenging in the last few years, the Group has strong market positions, differentiated technologies and talented people. While the UK defence market is difficult, defence spending in the US, the Group's largest market, is increasing. The Board is focused on identifying the right leader to deliver shareholder value through a renewed focus on organic performance in the next stage of the Group's development."
In its second RNS today it also noted the UK market remains difficult and has become "increasingly so in the second half", with the MoD pausing, cancelling or delaying several programmes. As a result, organic revenue is expected to fall 4%.
Management also said it has had to increase investment surrounding a particular contract win which will impact full-year profits. It is now expected to be "approximately £120m".
The stock tumbled in early morning trading as a result of the announcements, down 23% at the time of writing.
Despite the woes in the UK market, its largest defence market, the US, remains strong and continues to grow for the Group with several contracts wins set to bolster 2018 figures.
The Group currently has a Market Cap of almost £1.2bn with today's current share price of 1278p representing an almost 8-year low for the Group.
It trades at a 12-month forecast PE ratio of 11x versus the industry median of almost 14x, while today's new full-year Revenue forecast of c. £770m is down from the £786m reported in FY16.