Chemring boosts profits outlook after strong orders for military technology and electronic combat systems
Just over £450million in orders was received by the Romsey-based business Chemring has borrowed £50m from the Covid Corporate Financing Facility CEO Michael Ord: ‘We have good momentum as we near the end of FY20’
Aerospace firm Chemring Group has said it expects profits to be at the upper end of its forecast after receiving higher orders for products in its sensors and information division.
Chemring said the unit, which provides electronic warfare, counter explosive hazards, and biological detection technology, saw orders increase by a third in the ten months up to August 31.
Just over £450million in orders was received by the Romsey-based business, a 4 per cent rise on last year. It now believes annual operating profits will be between £47million and £53million.
Chemring received a $21million first delivery order for the US Department of Defense’s Husky Mounted Detection System (pictured above), which helps to detect landmines
It highlighted the strong performance of its Roke subsidiary ‘in the national security domain,’ which gained orders from the United States and elsewhere for the ‘Resolve Light’ Electronic Warfare system.
Further progress was made in its US Sensors operations thanks to a $21million first delivery order for the US Department of Defense’s Husky Mounted Detection System (HMDS), which helps to detect landmines.
Chemring’s chief executive Michael Ord remarked today: ‘This has been a busy period in which the resilience of the Group has been demonstrated as we continue to make good progress despite the challenges presented by COVID-19.
He added: ‘We have good momentum as we near the end of FY20 and move into FY21 and, despite the near-term uncertainty that COVID-19 presents.’
Chemring’s equipment includes the ‘Resolve Light’ Electronic Warfare system and the Aerosol and Vapor Chemical Agent Detector, better known as AVCAD
‘I remain confident that our leading technologies, deep long-term customer relationships and sole-source or market-leading positions mean Chemring’s long-term prospects remain strong.’
Chemring’s trading update comes three months after it published its highly-impressive six-month interim results showing revenues had risen 37 per cent to £191million while statutory operating profits climbed more than 200 per cent compared to the same period in 2019.
The company declared it had remained open for business despite issues arising from the Covid-19 pandemic and that its performance had exceeded expectations.
Chemring said ‘excellent progress’ had been made in the Australian division due to the shipment of countermeasure machinery for the US’s F-35 stealth fighter programme
It borrowed at least £50million from the Covid Corporate Financing Facility that was introduced by the government in March to help enhance the liquidity of large firms.
Other defence companies to borrow from the scheme include Meggitt, which provides parts for the Typhoon fighter jet and Rolls Royce, who manufacture military aircraft engines and reactor cores for submarines.
The company also said its Energetics was ‘performing well’ and had augmented its position in the US space market by getting its devices to ‘play critical roles’ on two NASA missions; the latest Mars mission, and the Crew Dragon mission to the International Space Station.
It added that ‘excellent progress’ had been made in the Australian division due to the shipment of countermeasure machinery for the US’s F-35 stealth fighter programme.
Aerospace business Rolls Royce revealed in June that 3,000 positions would go in the UK
Countermeasure equipment covers material that is designed to protect planes and ships from missile threats. This includes infrared decoys, advanced flares, chaff radar technology and the Centurion missile system.
Closer to home, Chemring said its UK business was ‘meeting its manufacturing volume objectives and is now focused on driving improved operational efficiency.’
The group has not announced any job cuts in the UK, unlike other defence businesses such as Rolls Royce, which revealed in June that 3,000 positions would go, and Meggitt, which confirmed 1,800 job losses in April.
Shares in Chemring were up 3.6 per cent to 260p by late morning.