Manufacturer issues profit warning amid delays to key defence programme

Solid State has issued a profit warning as it faces delays to a “prominent defence order programme”.

The manufacturer of computing, power, and communications products has been told that expenditure on the programme has been paused, which is believed to be in connection with the completion of the UK Government’s strategic defence review next summer.

It is “confident that this is a temporary delay and that expected orders will still be received in due course” but the orders will fall outside the current financial period.

As a result, Solid State’s performance for FY24/25 will be “materially below current consensus expectations”. The timing of the strategic defence review means it remains uncertain whether these delays will also affect orders and deliveries originally expected in FY25/26.

In its latest trading update on November 6, management highlighted good visibility over the expected recurring requirement for communications equipment in the security and defence sector.

Gary Marsh, Chief Executive Officer, said: “There is strong demand for our technology within the Forces, as operatives continue to experience the benefits of the communications equipment previously delivered.

“While the current delays in receiving orders are frustrating, our relationships with the Forces and key defence prime contractors underpins our confidence in the Group’s position within this sector. The Board remains optimistic about the medium and long-term outlook for defence spending given the current geopolitical climate.

“Aside from this order deferral, the open order book continues to improve across our target markets.”