Ultra Electronics Holdings Plc (ULE) fell the most in more than two years after the maker of submarine-hunting equipment cut its full-year sales forecast on delayed government contracts.
The stock fell as much as 7.3 percent, the biggest intraday drop since August 2011, after the Greenford, England-based company said it’s “encountering a number of headwinds” that will depress sales to slightly below 2012 levels. The company last year had sales of 760.8 million pounds ($1.2 billion).
Ultra joins Cobham Plc and Meggitt Plc among European aerospace and defense companies reducing their earnings outlooks in recent weeks. The defense industry has been hit by a slowdown in U.S. military spending and delays in securing some foreign deals.
“In the U.S. government-funded market, the unexpected shutdown in October further impacted the federal procurement process, delaying expected orders, approvals and payments,” Ultra said in the statement. “Many of the contracts awarded continue to be funded on an incremental basis.”
The stock was down 5.8 percent at 1,786 pence at 9:27 a.m. in London, paring the advance to 7.3 percent this year.
Delays have also affected activity on an Oman contract, Ultra said. Overall, “performance will be broadly in line with expectations for 2013,” it said.
The new outlook “reflects the challenging market conditions in the U.S.” and the Oman issue, Chris Dyett, a London-based analyst at Investec, said in a note cutting the recommendation on the stock to add from buy.
Ultra, which has made numerous acquisitions in recent years, continues to look for deals and has “substantial headroom associated with its current banking facilities,” the company said.
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