Chemring raises earnings outlook following strong orders for military technology and electronic combat systems
- Just over £ 450 million in orders was received by the Romsey-based company
- Chemring has borrowed £ 50 million from the Covid Corporate Financing Facility
- CEO Michael Ord: ‘We have good momentum as we approach the end of FY20’
Aerospace company Chemring Group has said it expects earnings to be at the top of its forecast after receiving higher orders for products in its sensors and information division.
Chemring said the unit, which provides electronic warfare, counter-explosion hazard and biological detection technology, saw orders increase by a third in the ten months to Aug. 31.
Just over £ 450 million in orders were received by the Romsey-based company, up 4 percent from last year. It now believes annual operating profit will be between £ 47 million and £ 53 million.
Chemring received an initial $ 21 million supply order for the U.S. Department of Defense Husky Mounted Detection System (pictured above), which helps detect landmines
It highlighted the strong performance of its subsidiary Roke ‘in the field of national security’, which received orders from the United States and elsewhere for the ‘Resolve Light’ Electronic Warfare system.
Further progress was made in the US Sensors’ business with an initial $ 21 million supply order for the US Department of Defense Husky Mounted Detection System (HMDS), which helps detect landmines.
Michael Ord, CEO of Chemring, commented today: “This has been a busy period in which the Group’s resilience has been demonstrated, while we continue to make good progress despite the challenges of COVID-19.
He added, “We have good momentum as we approach the end of FY20 and into FY21 and, despite the short-term uncertainty that COVID-19 provides.”
Chemring’s equipment includes the ‘Resolve Light’ Electronic Warfare System and the Aerosol and Vapor Chemical Agent Detector, more commonly known as AVCAD
“I remain convinced that our leading technologies, deep long-term customer relationships and exclusive or market-leading positions will continue to provide Chemring’s long-term outlook.”
Chemring’s trading update comes three months after releasing its very impressive publication semi-annual interim results showing revenues up 37 percent to £ 191 million, while statutory operating profit increased over 200 percent compared to the same period in 2019.
The company stated that it had remained open despite problems from the Covid-19 pandemic and that its performance exceeded expectations.
Chemring said there had been ‘excellent progress’ in the Australian division thanks to the dispatch of countermeasures for the US F-35 stealth fighter program
It borrowed at least £ 50 million from the Covid Corporate Financing Facility introduced by the government in March to help improve liquidity for large companies.
Other defense companies that can be borrowed from the plan include Meggitt, which supplies parts for the Typhoon jet, and Rolls Royce, which manufactures military aircraft engines and submarine reactor cores.
The company also said its Energetics “performed well” and strengthened its position in the US space market by letting its devices “play a critical role” 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 thanks to the shipment of countermeasure machines for the US F-35 stealth fighter program.
Aerospace company Rolls Royce revealed in June that 3,000 positions in the UK would go
Countermeasures equipment includes materials designed to protect aircraft and ships from missile threats. This includes infrared decoys, advanced flares, kafradar technology and the Centurion missile system.
Closer to home, Chemring said its UK operations “are meeting production volume targets and are now focused on improving operational efficiency.”
The group has not announced any job cuts in the UK, unlike other defense companies such as Rolls Royce, which revealed in June that 3,000 jobs would be lost, and Meggitt, which confirmed 1,800 job cuts in April.
Shares in Chemring were up 3.6 percent to 260p by the end of the morning.