REG - Chemring Group PLC - Trading Update

ChemringAnnouncement

17/10/2024 07:00

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RNS Number : 5081I  Chemring Group PLC  17 October 2024

FOR IMMEDIATE RELEASE
 
                          17 OCTOBER 2024

 

CHEMRING GROUP PLC

FY24 TRADING UPDATE

 

Chemring Group PLC ("Chemring" or "the Group") today issues a scheduled
trading update for the period to 30 September 2024.

 

Current trading and outlook

 

Trading in the period has progressed as planned, with continued strong order
intake a notable highlight. The outturn for the year ending 31 October 2024 is
in line with the current range of analyst expectations*, despite current
foreign exchange headwinds, and is fully covered by orders.

 

The Group has received a number of significant orders during the period. As at
30 September 2024, order intake for the year to date was £638m (30 September
2023: £604m) and the order book was £1,108m (30 September 2023: £869m).
Order cover for expected FY25 revenue is building well, with Countermeasures
& Energetics having 95% (2023: 87%) order cover of expected revenue and
the shorter cycle Sensors & Information sector having 47% (2023: 54%)
cover. In Countermeasures & Energetics order cover for expected FY26 and
FY27 revenues are currently 75% and 45% respectively, again demonstrating the
long-term nature of demand.

 

Countermeasures & Energetics

 

Energetics

 

In Energetics we continue to see increased levels of activity and demand in
the propellants and energetic materials markets as customers re‐evaluate
their operational usage and stockpile requirements associated with traditional
defence capabilities.

 

Our Norwegian business, Chemring Nobel, continues to work with a number of its
customers on establishing long-term supply agreements and is expected to end
the financial year with another record order book, providing significant
visibility over the medium term.

 

In March 2024 we announced that Chemring Nobel had been awarded grant funding
of c.£90m in support of its capacity expansion projects. Chemring is pleased
to confirm that detailed work packages have been approved by the European
Commission, and to date it has received £19.5m. Further amounts are expected
to be received annually on completion of work packages.

 

On 10 October 2024 the Norwegian Government announced that, in partnership
with Chemring Nobel, it had launched a feasibility study into the
establishment of a new production facility to further increase the production
of military explosives, as they view Chemring Nobel as the producer in Europe
and North America that can establish increased production the fastest. This
co-funded feasibility study, which is expected to be concluded by the end of
2024, will investigate the geographic location, infrastructure requirements
and environmental considerations of building a new production facility. The
study will also consider the role and the levels of any financial contribution
made by the Norwegian Government.

 

In the US, our Chicago business has received multiple orders in the period
including an order from the United Launch Alliance to develop initiators and
an order from Boeing in relation to the Harpoon missile program, with the
combined value of these two orders totalling over $20m.

 

Our three niche Energetics businesses, which design and manufacture high
precision engineered devices and specialist materials, continue to see strong
customer demand with order intake up 32% to £319m (30 September 2023:
£242m). This strong performance demonstrates the value that our customers
place on Chemring's niche products and reinforces our decision to invest in
expanding capacity at our energetic sites.

 

Countermeasures

 

In Countermeasures we have continued to see robust customer demand as we have
maintained our position as a world leader in the design, development and
manufacture of advanced expendable countermeasures. In the year to date the
Group's countermeasures businesses received orders totalling £172m (30
September 2023: £159m).

In the period since 30 April 2024 our UK Countermeasures business ("CCM UK")
has seen strong order intake with notable awards including a £36m order for
Typhoon countermeasures, a £16m order from the UK MOD, and a £8m order from
MBDA USA for a new naval infra-red decoy. This was the first US production
order that CCM UK has received in over 10 years and will contribute to the
business having a record order book at year end.

Contract awards - Sensors & Information

 

Roke

 

In the Sensors & Information sector our technology business, Roke, has
continued to make good progress with further contract wins in the area of
Electronic Warfare ("EW"). Orders totalling £10.5m were received from
Lithuania, Latvia and the UAE for the supply of Roke's Resolve 3 man-portable
EW system.

Roke's expertise in the field of EW was further demonstrated in September 2024
when Roke was announced as one of four UK organisations to have been selected
for research funding in the first AUKUS Innovation Challenge. The trilateral
AUKUS Pillar 2 EW Challenge called for proposals to identify electromagnetic
spectrum technology solutions to help give the AUKUS nations a strategic edge
in targeting and to provide protection against adversarial
electromagnetic-targeting capabilities.

US Sensors

 

In the US, deliveries of systems under the Joint Biological Tactical Detection
System ("JBTDS") Low Rate Initial Production contract awarded in September
2023 have all been completed, and we continue to make good progress on the
Enhanced Maritime Biological Detector ("EMBD") Program of Record. On JBTDS we
continue to support the customer as they progress through testing and
acceptance, with the expectation of a Full Rate Production contract being
awarded in FY2026.

 

Full year results date

 

The results for the year ending 31 October 2024 will be released on 17
December 2024.

 

Michael Ord, Chemring Group Chief Executive, commented:

 

"The business has continued to perform as expected, and with FY24 revenue
fully covered by the order book, we remain on track to deliver FY24
performance in line with the current range of analyst expectations despite
current foreign exchange headwinds.

 

The growth in order intake demonstrates both our customer's needs to rebuild
their defence deterrent for the long term and their confidence in Chemring to
develop and supply highly effective solutions. These awards strengthen our
order cover over the near to medium term, and position the Group well to meet
our ambition to increase annual revenue to c.£1bn by 2030."

-ENDS-

 

* The Group believes analyst forecasts for adjusted operating profit for the
year ended 31 October 2024 are in the range of £70.8m to £73.6m.

 

 

For further information:

Rupert Pittman           Group Director of Corporate Affairs,
            01794 463401

                                      Chemring Group
PLC

 

James McFarlane        MHP Group
                                   07584 142665

Ollie Hoare
 
        07817 458804

 

 

Cautionary statement

This announcement contains forward-looking statements that are based on
current expectations or beliefs, as well as assumptions about future events.
These forward-looking statements can be identified by the fact that they do
not relate only to historical or current facts. Forward-looking statements
often use words such as anticipate, target, expect, estimate, intend, plan,
goal, believe, will, may, should, would, could, is confident, or other words
of similar meaning. Undue reliance should not be placed on any such statements
because they speak only as at the date of this document and, by their very
nature, they are subject to known and unknown risks and uncertainties and can
be affected by other factors that could cause actual results, and Chemring's
plans and objectives, to differ materially from those expressed or implied in
the forward-looking statements. There are a number of factors which could
cause actual results to differ materially from those expressed or implied in
forward-looking statements. Among the factors that could cause actual results
to differ materially from those described in the forward-looking statements
are: increased competition, the loss of or damage to one or more key customer
relationships, changes to customer ordering patterns, delays in obtaining
customer approvals for engineering or price level changes, the failure of one
or more key suppliers, the outcome of business or industry restructuring, the
outcome of any litigation, changes in economic conditions, currency
fluctuations, changes in interest and tax rates, changes in raw material or
energy market prices, changes in laws, regulations or regulatory policies,
developments in legal or public policy doctrines, technological developments,
the failure to retain key management, or the key timing and success of future
acquisition opportunities or major investment projects. Chemring undertakes no
obligation to revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are affected as a
result of new information, future events or otherwise, save as required by law
and regulations.

 

Notes to editors

 

·   Chemring is a FTSE-250 listed global business that specialises in the
manufacture of high technology products and the provision of services to the
aerospace, defence and security markets

·   Employing approximately 2,600 people worldwide, and with production
facilities in four countries, Chemring meets the needs of customers in more
than fifty countries

·   Chemring is organised under two strategic product segments: Sensors
& Information and Countermeasures & Energetics

·   Chemring has a diverse portfolio of products that deliver high
reliability solutions to protect people, platforms, missions and information
against constantly changing threats

·   Operating in niche markets and with strong investment in research and
development ("R&D"), Chemring has the agility to rapidly react to urgent
customer needs

 

www.chemring.com (http://www.chemring.com)

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