Chemring shares buoyed by management changes

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Investors are hoping for a turnaround at the defence equipment group.

Investors were betting fresh management changes at Chemring would herald a turnaround in fortunes at the troubled defence equipment group.

The company has had a torrid time of late, with two profit warnings knocking market confidence in the business. Traders had hoped private equity firm Carlyle would seal a deal to take over Chemring last year but talks between the two ended without a bid and Chemring shares eventually finished 2012 down more than 40pc.

However, investors and analysts yesterday greeted the appointment of former Umeco finance director Steve Bowers as Chemring’s new FD with optimism. The defence group was keen to stress Mr Bowers’ turnaround credentials, describing Umeco as “transformed in both scale and focus” during his tenure and highlighting his close involvement in disposals and acquisitions. Chemring also named Jim Devine as head of human resources.

The appointments follow radical management change at Chemring. David Price unexpectedly stepped down as chief executive in October, to be replaced by Mark Papworth. He will give his initial thoughts on the business at Chemring’s full-year results on January 24 and investors, buoyed by hopes of a brighter future for the company, sent the shares up 15.3 to 253.6p.

The FTSE 100 consolidated the enthusiastic gains seen on Wednesday, when shares around the world soared on investor relief that the US had avoided the “fiscal cliff”. Encouraging jobs figures from across the pond supported the blue-chip index during trading today and helped the FTSE 100 (FTSE: ^FTSE - news) add 19.97 points to 6,047.34, while the FTSE 250 (FTSE: ^FTMC - news) advanced 39.40 to 12,651.25.

Fashion retailer Next , which lifted its full-year profit forecast, led the FTSE 100 risers with an increase of 101p to £38.73, a record high. Marks & Spencer climbed in its wake and added 5.7 to 388.4p.

Meanwhile, outsourcing group Serco was in favour following an upgrade to “buy” from “neutral” at Espirito Santo. Analysts at the broker reckoned the company could outperform the wider market over the next 12 months, adding that the 17pc valuation discount to its fellow outsourcers is “unwarranted”. Traders took Espirito Santo’s advice and Serco shares rose 9 to 550½p.

The same broker was responsible for sending shares in catering group Compass (LSE: CPG.L - news) south. Espirito Santo cut its rating on the company to “neutral” from “buy”, following the strong share price performance last year, arguing “the positives are fairly reflected in the valuation”. Compass dipped 2½ to 735p.

Building materials group CRH , which said it spent €375m (£304.2m) on acquisitions and investments since the end of June, suffered the heaviest fall on the blue chip index. Citigroup (NYSE: C - news) said CRH (NYSE: CRH - news) was one of its least preferred shares and forecast slower US growth and CRH lost 17p to £12.66.

The acquisition of US energy (NasdaqCM: USEG - news) storage company Subsurface Group saw mid-cap construction company Balfour Beatty (Other OTC: BAFBF - news) gain 1½ to 282.1p.

“It will not impact forecasts at this stage but is a good reminder of the strategic push to diversify future earnings away from the more cyclical construction activities,” said Panmure Gordon analyst Wayne Brown, who rates Balfour a “buy”. Revenues from Subsurface are expected to have reached about £31m in 2012.

FTSE 250-listed spread-better IG Group was in traders’ sights and advanced 10.7 to 470.2p, courtesy of an upgrade at Numis. Analyst James Hamilton, who maintained his “buy” recommendation, boosted his target price to 556p from 532p and described the group as an “attractive addition to a financial services portfolio”.

It was Imagination Technologies (Other OTC: IGNMF - news) that topped the second-tier index with a rise of 31.7 to 439.7p. One dealer suggested the chip designer, which underperformed at the end of last year, was helped higher by “bottom fishing” traders, while an analyst said the shares may be climbing ahead of next week’s key Consumer Electronics Show in Las Vegas.

Cineworld received a leg-up from Canaccord Genuity just days before its trading update on Tuesday. Analyst Wayne Brown raised his 2013 earnings-per-share target by 7pc to 22.6p in the wake of the acquisition of Picturehouse, announced last month. Mr Brown said the cinema group is likely to report a strong fourth quarter, helped by the release of the latest James Bond adventure, Skyfall, and Cineworld shares added 11¾ to 274¼p.

Elsewhere, the market was unfazed by the latest political ruckus over the Falkland Islands (Other OTC: FLKDF - news) . Argentine President Cristina Fernandez de Kirchner has called for the territories to be returned to Argentina, something Prime Minister David Cameron has rejected. The London-listed exploration groups operating in the area shrugged off the dispute, with Falkland Oil and Gas (Other OTC: FLKOF - news) gaining 1 to 29½p and Borders & Southern Petroleum (Other OTC: BDRSF - news) edging up 0.375 to 20.125p.

Fellow small-capper Nighthawk Energy (Other OTC: NHEGF - news) , which operates a shale oil project in Colorado, was having less luck. The shares shed 0.425 7.8pc to 5p after the group said poor weather hampered production last month.

Iron ore company Bellzone Mining (Other OTC: BZLNF - news) was under pressure after reporting difficulties with its first shipment of ore from the Forecariah joint venture in the Republic of Guinea, which set sail in December.

The group encountered issues loading the cargo that it expects will take at least six months to resolve. In the meantime, ships will be chartered to carry out the loading process. Bellzone shares fell 1¼ 7.7pc to 15p.