Chemring sees FY operating profit in line with views after 'significant' contract wins

(Sharecast News) - Chemring said on Monday that full-year operating profit was set to be in line with analyst expectations following further "significant" contract wins in the second half. In a post-close trading update, the company said FY25 adjusted operating profit will be in line with market expectations of £75.8m, while adjusted earnings per share are expected to benefit from slightly lower finance costs.

The group's adjusted operating margin is expected to be around 14.7%, versus 14.2% a year earlier, with a stronger-than-expected performance from its energetics division.

"We continue to see increased levels of demand for propellants, energetic materials and high-integrity devices, as customers re-evaluate operational usage and stockpile requirements associated with traditional defence capabilities," the company said.

"This has offset continued softness in Sensors & Information resulting primarily from delayed UK Government order placement across both National Security and Defence areas, which is a continuation of the trend we highlighted in our interim results."

The defence firm also said it was assessing strategic options for Alloy Surfaces, one of its US countermeasures businesses, which will be reported as discontinued in the FY25 results.

At 31 October, the order intake for the year was around £781m, up from £648m at the same time last year, while the order book was around £1.3bn, up from £1bn, as Chemring continues to win "significant" orders.

The company struck an upbeat note on its outlook.

"The group continues to see robust market conditions, with increasing customer demand for its technology-driven solutions and a resurgent demand for traditional defence capabilities," it said. "This strong outlook is expected to be maintained."