17th Oct 2023 10:53
(Alliance News) - Chemring Group PLC on Tuesday confirmed that it expects to meet its annual guidance, which had been threatened by a delivery delay in the US.
The delays, due to raw material quality concerns "outside of the control of the group", were for orders representing GBP25 million worth of revenue.
The orders were for US Department of Defense countermeasure deliveries.
With the issue now resolved, the Romsey, England-based provider of technology products and services to aerospace, defence and security markets expects to meet market expectations for the year full-year to October 31.
The adjusted operating profit analyst forecast for the year ending October 31 stands at GBP66.2 million, which would represent a 3.4% increase from the GBP64.0 million achieved in financial 2022.
Peel Hunt analyst Henry Carver commented: "The timings of the deliveries mean that some of the cash receipts should now fall into next year, but as we were looking for net debt of GBP400,000 and [earnings before interest, tax, depreciation, and amortisation] of GBP87 million this is no cause for concern."
Peel maintained its 'buy' recommendation and 410.0 pence price target for the stock.
Chemring shares were 3.7% higher at 278.00 pence each in London on Tuesday morning.
Chemring shares fell 6.1% back on September 12 when it cautioned on the countermeasure orders. They continued to steadily decline and fell as low as 258p on October 4, a roughly four-month low.
An outbreak of hostilities in the Middle East, following a Hamas attack in Israel earlier in October, has supported shares in defence firms, however, helping Chemring's stock regain some poise.
By Eric Cunha, Alliance News news editor
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