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Chemring keeps 2023 outlook but US budget dispute pushes back orders

15th Mar 2023 11:50

(Alliance News) - Chemring Group PLC on Wednesday said annual expectations remained unchanged, although it expects trading to be weighted in the second half of 2023, as Washington haggles over spending.

The Romsey, Hampshire-based defence technology manufacturer cited its previous guidance that a heavier weighting to the second half was due to order intake delays in 2023 "as a result of the US government's extended continuing resolution".

A continuing resolution refers to a temporary spending bill which allows federal government operations to continue when final appropriations have not been approved by Congress and the US president.

Republicans and Democrats in Congress are fighting over whether to raise the US debt ceiling. US President Joe Biden described the spending dispute as "the biggest threat" to the US economy, AFP reported last week.

Chemring said it continues to manage delays in customer procurements, labour availability, and other inflationary pressures, including energy costs and wage inflation. It hopes to mitigate the impact of these pressures via passing through costs and generating additional operational efficiencies "where possible".

It said order cover with respect to 2023 revenue is now expected to be 90%, having started the financial year with an order cover of 96%. As of February 26, the order book stood at GBP677 million, rising 42% from GBP476 million a year earlier.

"The group remains well positioned for growth with end-markets in both sectors aligned to areas of increased customer activity. The group continues to develop and deliver mission-critical technologies, products, and services, which our customers deploy to meet the challenges of an increasingly contested and volatile world," Chemring said in a statement, referring to the conflict in Ukraine.

"The international security environment is driving strong demand in areas of active cyber-defence, operational mission support and open-source intelligence services, and space launch systems. Demand also continues to grow for propellant and energetic materials, and high-integrity missile sub-components."

It will report its interim results for the six months ending April 30 on June 6.

Shares in Chemring were up 0.5% to 277.50 pence each in London late Wednesday morning.

By Greg Rosenvinge, Alliance News reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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