22nd Jan 2015 09:42
LONDON (Alliance News) - Chemring Group PLC Thursday reported lower underlying profits and revenue for its last financial year, after it was hit by the downturn in defence markets, and it said its current year performance was likely to be weighted to the second half.
The company, which makes countermeasures like flares and decoys that military aircraft use against missile attack as well as sensors and electronics used in military vehicles, has been hit hard by the downturn in defence markets like the US and UK after the end of major military operations in the likes of Afghanistan and Iraq as well as defence budget cuts in the wake of the financial crisis.
It spent its last financial year contracting the business, selling off some operations to try and stabilise the business. It dropped out of the FTSE 250 index as a result.
It posted an overall pretax loss of GBP58.9 million in the year to October 31, slightly wider than the GBP57.4 million loss it reported a year earlier, while revenue slumped to GBP474.9 million, from GBP624.9 million.
Excluding operations it has now sold or discontinued, its revenue dropped to GBP403.1 million, from GBP472.3 million, while its pretax profit excluding things like restructuring and disposal costs, impairments, and moves in its derivative financial instruments fell to GBP28.1 million, from GBP36.5 million. Its underlying operating margin declined to 11.6%, from 11.9%, on the same basis.
It cut its total dividend for the year to 4.1 pence, from 7.2p a year earlier, maintaining its policy of a dividend that is covered three times by its underlying earnings. Its final dividend is 1.7p, down from 3.8p.
"2014 has been an important and challenging year for Chemring, characterised by a stabilisation and subsequent improvement in operational performance, coupled with a strengthened position on major future US, NATO and broader global programmes. Against a backdrop of a subdued defence market, we see clear opportunities for future revenue growth and improving margins, although risks remain due to continued difficulty in predicting the timing of orders," Chief Executive Michael Flowers said in a statement.
Chemring said it thinks its performance in the current year will be weighted to the second half due to its uncertainty about the timing of potential contracts for its sensors and electronics business.
It is looking to grow the sensors and electronics business in the current year, particularly in counter- improvised explosive devices.
"We are well-positioned on strategic programmes in the US, with success in capturing research and development phases of both counter-IED and chemical detection Programs of Record. Our immediate priorities are to secure orders in NATO and the Middle East for our US Sensors & Electronics products, while continuing to improve the performance of all our manufacturing operations," Flowers said.
Chemring shares were up 0.2% at 230.75 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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