26th Feb 2025 07:00
FOR IMMEDIATE RELEASE 26 FEBRUARY 2025
CHEMRING GROUP PLC ("Chemring", the "Group" or the "Company")
AGM Update
Chemring, the international manufacturing and technology company that supplies high-reliability products and innovative services into growing areas of Defence, Security, and Space markets, issues the following update ahead of its Annual General Meeting taking place later today.
Key points:
· FY25 outlook in line with expectations.
· Order book at 30 January 2025 of £1,351m (30 January 2024: £991m).
· Q1 order intake of £393m. Significant orders received across both sectors.
· Expected FY25 revenue 81% covered by Q1 revenues and current order book. Outer years cover continuing to build.
· The market opportunity for Chemring continues to grow.
· New £40 million share buyback programme commenced.
Michael Ord, Group Chief Executive, commented:
"The current financial year continues to plan and our outlook remains in line with market expectations. Our order book is at a record level and order intake across both sectors benefitted from the receipt of several significant orders, demonstrating continued customer demand and confidence in Chemring's market leading products and services. The Group is increasingly well positioned, with a strong and sustainable platform for future growth. Given the Board's growing confidence in the long-term potential of the Group it has decided to commence a new share buyback."
Current trading and outlook
The Board's expectations for the Group's FY25 outlook remains in line with market expectations* with (as previously stated) a similar H2 weighting to last year.
Order intake since 31 October 2024 was £393m, an increase of 187% on the prior year (30 January 2024: £136.9m).
With the new administration in the US pushing for significant increases in NATO defence spending and with EU member states recognising the critical need to scale up and co-ordinate defence production across Europe, the market opportunity for Chemring continues to grow. This presents significant opportunity for the Group's products and services, reinforcing the decision to invest, supported by our customers, in increasing capacity and capability to meet sustained long term market demand.
We continue to assess further new capacity expansion opportunities together with associated customer funding, alongside bolt-on acquisition opportunities.
We remain on track to achieve our ambition of increasing annual revenue to c.£1bn by 2030, generating mid-teen margins in the medium term.
Orders
The order book at 30 January 2025 was £1,351m (30 January 2024: £991m). Having started the financial year with order cover of 77%, Group expected FY25 revenue is now 81% (30 January 2024: 87%) covered by revenue generated in the period to date and the current order book.
In our Sensors & Information ("S&I") sector Roke has seen continued momentum within its defence services and products business with c.£56m of framework agreements and awards received in Q1. Further wins in the area of Electronic Warfare ("EW") include an initial £6m contract with Egypt for the delivery of Roke's Perceive, Resolve and Locate EW systems. Export licence approval is expected over the coming weeks, at which point the order will be taken to the order book. Roke continues to see significant interest from European states and Japan, with further EW orders expected to be received in the coming months.
Other notable events include the receipt of a multi-year agreement with a major US Prime Contractor for the supply of its high-speed Miniature Radar Altimeter ("MRA"). With a value of at least £26m (US$32m) over four years, this agreement is illustrative of Roke's strategic focus on growing revenues from its portfolio of world-leading high margin defence products and systems. It also demonstrates the critical role Chemring plays in multiple space and missiles programmes is not solely confined to our Energetics businesses.
In the US, Chemring Sensors & Electronic Systems ("CSES") has been awarded the fourth production option as part of the Full Rate Production contract for the Enhanced Maritime Biological Detection ("EMBD") Program of Record. The EMBD system is an advanced sensor system to rapidly detect, collect and identify airborne biological warfare agents. The total value of the production option is $15m with deliveries being made in the fourth quarter of FY25 and completing in FY26. The customer is the US Department of Defense and all work under this contract will be performed at CSES's facility at Charlotte, North Carolina.
Having started the year with 48% cover, the S&I sector's FY25 expected revenue is now 54% covered by revenue generated in the period to date and the current order book (30 January 2024: 74%). Order intake within S&I has progressed as expected during the current financial year.
In our Countermeasures & Energetics ("C&E") sector we continue to see increasing levels of demand for propellants and energetic materials. In Norway, our energetic materials business, Chemring Nobel, signed a three-year supply agreement with SAAB Switzerland for the supply of HMX. This contract, valued at £36m, will see deliveries being made in 2028 - 2030.
In the UK, our Scotland based business Chemring Energetics UK ("CEUK") received an order valued at £23m for the delivery of critical components used in the Next Generation Light Anti‐Tank Weapon system ("NLAW"). This award is a follow-on to the £43m contract that CEUK received from SAAB in March 2023. The Group expects to see deliveries under this contract commencing in 2026 and continuing into 2027.
Having started the year with 97% cover, the C&E sector's FY25 revenue is now 98% covered by revenue generated in the period to date and the current order book (30 January 2024: 94%).
Strategic aims
As previously communicated, Chemring's strategic imperatives are threefold - i) grow, through the investment in capacity, technology and people to drive organic growth, ii) accelerate, through the investment in value-enhancing bolt-on acquisitions to accelerate growth, and iii) protect, by investing to protect sole-sources and marketing leading positions. This all supports the Group's ultimate strategic ambition to increase its annual revenue to c.£1bn by 2030 whilst balancing near-term performance with longer-term growth and value creation.
Capital allocation
As laid out as in the Group's FY24 results, the four key tenets of Chemring's capital allocation policy are as follows:
1. Investment in the business, including investment in the Energetics businesses to capitalise on unprecedented demand and continual capex investment to increase automation, enhance safety and drive margin improvement;
2. Focused M&A centred on incremental bolt-on acquisitions that complement existing capabilities and accelerate growth in customer priority areas;
3. Dividends, targeting annual dividend cover of 2.5x; and
4. Return of surplus capital to shareholders.
The overall objective of Chemring's capital allocation policy is to maintain a resilient balance sheet with leverage of
Commencement of £40 million share buyback programme
In light of the Group's capital allocation policy, the Board announces that it will commence a share buy-back programme for its ordinary shares ("Shares") for up to a maximum consideration of £40 million (the "Programme"). The Programme will commence today and end no later than the 2027 AGM. The purpose of the Programme is to reduce Chemring's share capital, and it is intended that Shares purchased under the Programme will be cancelled.
Further details on the buyback programme are included in Appendix 1 to this announcement.
Interim results date
The Group will report its interim results for the six months ended 30 April 2025 on 3 June 2025.
- ENDS -
* The Group believes the current consensus of analyst forecasts for FY25 are for:
- revenue of £540m;
- underlying operating profit of £75.9m; and
- underlying EPS of 20.0 pence.
For further information:
Rupert Pittman Group Director of Corporate Affairs, 01794 463401
Chemring Group PLC
James McFarlane MHP Group 07584 142665
Ollie Hoare 07817 458804
Cautionary statement
This announcement may contain forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Chemring's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements. There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are: increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects. Chemring undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.
Notes to editors
· Chemring is a FTSE-250 global business that specialises in the manufacture of high technology products and the provision of services to the aerospace, defence and security markets
· Employing approximately 2,700 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries
· Chemring is organised under two strategic product segments: Sensors & Information and Countermeasures & Energetics
· Chemring has a diverse portfolio of products that deliver high reliability solutions to protect people, platforms, missions and information against constantly changing threats
· Operating in niche markets and with strong investment in research and development ("R&D"), Chemring has the agility to rapidly react to urgent customer needs
www.chemring.com
Appendix 1. Notes to the share buyback programme
The Company has entered into an irrevocable, non-discretionary instruction with Investec Bank plc ("Investec") to conduct the Programme on its behalf and carry out on-market purchases of Shares and to on-sell such Shares to Chemring.
Investec will make trading decisions in relation to the Programme independently of, and without further instruction from, Chemring. Any purchase of Shares contemplated by this announcement will be executed in accordance with the Company's general authority to repurchase Ordinary Shares granted by its shareholders at the annual general meeting held on 23 February 2024 (which received 99.07 per cent approval) and future annual general meeting approvals, Chapter 9 of the Financial Conduct Authority's UK Listing Rules, Article 5(1) of the Market Abuse Regulation (EU) No 596/2014 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended), the Commission Delegated Regulation (EU) No 2016/1052 (as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended), and other applicable laws. The Programme may on any given day exceed 25 per cent of the average daily trading volume on each trading platform on which the Shares are traded. Accordingly, the Company may not benefit from the exemption contained in Article 5(1) of MAR.
The Company will announce all transactions in Shares pursuant to the Programme by no later than 7.30 a.m. on the business day following the calendar day on which such transaction occurred.
At the time of this announcement, the Company's share capital comprises 273,112,620 Ordinary Shares with voting rights.
Appendix 2. Group overview
Chemring is a specialist manufacturing and technology business creating market-leading innovative solutions to meet its customers' complex needs. This is achieved by innovating at every stage of the value chain, from research and development ("R&D") through to design, manufacture and in-service support, working closely with its customers to deliver products, services and solutions for mission-critical success.
The Group operates across two strategic products segments, Countermeasures & Energetics and Sensors & Information.
Countermeasures & Energetics
Chemring is the world leader in the design, development and manufacture of advanced expendable countermeasures for protecting air and sea platforms against the growing threat of guided missiles. Its niche, world-class energetics portfolio provides high-reliability, single-use devices that perform critical functions for the space, aerospace, defence and industrial markets. It is critical supplier of specialist materials including propellant and energetic materials that are used in a wide variety of applications in the defence and civil markets.
Sensors & Information
The Sensors & Information sector, including Chemring's Roke business, continues to invest in technologies that safeguard and protect in an uncertain world, enabling clients to deliver competitive advantage, defend their people, assets and information, and defeat their adversaries.
The Group's customer base spans national defence organisations, security and law enforcement agencies, as well as commercial markets such as space and transport. It supports its customers in more than fifty countries across the globe from its home markets of the United Kingdom, the United States, Australia and Norway.