Chemring H1 profit hit by disruption in Countermeasures
By Michele Maatouk
Date: Tuesday 04 Jun 2024
(Sharecast News) - Chemring hailed a record interim order book on Tuesday but posted a drop in underlying profit as its Tennessee countermeasures business was hit by adverse weather conditions.
In the six months to 30 April, order intake was a record £345m, up 2% on the same period a year earlier, while the order book rose 39% to a record £1.04bn.
Revenue grew 8% to £223.4m, driven by a strong performance at Roke, which saw revenue growth of 19%. Growth in the company's specialist energetic materials businesses was offset by a weaker period for the countermeasures segment.
Chemring said underlying operating profit fell 5% to £25m, resulting in an underlying operating margin of 11.2%, down from 12.7%. The drop was attributed to operational challenges at the Tennessee countermeasures business, where production was disrupted due to adverse weather conditions and there were delays in the ramp-up of the automated facility.
Chief executive Michael Ord said: "The momentum seen in 2023 has continued with another period of record order intake and an order book of over £1bn, the highest in Chemring's history. This strong order intake across both sectors has further increased our order cover for the second half of 2024 to 93% and the board's expectations for the full year are unchanged.
"The increase in geo-political tensions around the world is driving a fundamental rearmament upcycle which is expected to last for at least the next decade. This visibility, together with the support of grant funding and our customers' desire to move to long-term partnering agreements, gives us the confidence to invest further in capacity and capability, reinforcing Chemring's position as a key supplier to NATO, and positioning the group well for the future. We now have the ambition to increase annual revenue to circa £1bn by 2030."
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