Ultra Electronics warned on profits after the cancellation of UK defense programs reduced revenue.
"The majority of the group's markets have been satisfactory, however the UK market has been difficult and has become increasingly so in the second half," the company said.
"There are mounting pressures in the funding of UK defence programmes and this has resulted in the UK Ministry of Defence pausing, cancelling or delaying numerous programmes."
The company said it now expected full-year total revenue to be around £770m and organic revenue to show a decline of about 4%.
Combined with a higher-than-expected investment spend, the reduced revenue means the company now expected an underlying operating profit for the full year of about £120m.
Ithra legal costs, meanwhile, are expected to be £8m for the full year and will be treated as non-underlying in nature, the company added.
The board "would currently be minded" to recommend a final dividend of 35.0p per share and will finalise the dividend when it announces the full year results on March 5, Ultra Electronics said.