- Chemring Group revealed its order book was £1.04bn as of 31 October
- Global military expenditure has jumped to record levels in recent years
Chemring Group ended the last financial year with a record order book and bumper profits, thanks to a boom in global defence spending.
The Romsey-based company, whose products include mine detection and aircraft safety sensors, revealed its order book totalled £1.04billion as of 31 October, a 13 per cent increase on the prior year.
While the firm’s sensors and information segment saw its order book plunge by 38 per cent to £105.5million, this was offset by a 24 per cent rise at its countermeasures and energetics division.
Chemring’s Norwegian-based subsidiary signed a 15-year deal with US aerospace giant Northrop Grumman in June to supply ‘energetic material’ used in missiles.
The segment later received a £194million order from Diehl Defence in November as part of a tie-up with the Scandinavian defence business Nammo to provide 155mm munitions to the German military.
That same day, Chemring gained a five-year £82million deal to supply components for an ‘undisclosed US missile programme’.
Strong demand: Chemring Group ended the last financial year with a record order book
According to the company, the order book covers more than three-quarters of its expected revenues for next year.
Global military expenditure continues to escalate amid the Ukraine war, the Israel-Hamas conflict, and worries about China’s growing military strength.
Private defence contractors have consequently seen an uplift in their orders, profits and share prices.
Michael Ord, chief executive of Chemring, said: ‘Changing customer spending priorities in the face of increased global uncertainty and competition have resulted in the order book being at its highest level in Chemring’s history.’
He added: ‘The outlook for global defence markets is increasingly robust, with strong growth expected over the next decade.’
Alongside a record order book, the firm reported its revenues rose by 8 per cent to £510.4million in the 12 months ending October, while its operating profits expanded by 28 per cent to £58.1million.
This was despite underlying margins being affected by poor weather conditions at its Tennessee Countermeasures business and deliveries related to a legacy contract from the US Department of Defense.
Following the result, the company has proposed raising its final dividend by 13 per cent to 5.2p per share, giving it a full-year dividend of 7.8p per share.
However, Chemring Group shares slumped by 7.6 per cent to 334p in early trading, making them the FTSE 250 Index’s biggest faller.
Neil Shah, executive Director at Edison Group, said: ‘Chemring’s strong order book, disciplined cash management, and commitment to innovation position it well for sustained growth.
‘With further opportunities in long-term partnerships and a clear strategy to reach £1billion in annual revenue by 2030, Chemring is firmly on track to deliver continued value to shareholders and stakeholders alike.’
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