TIDMCHG
RNS Number : 0711M
Chemring Group PLC
12 September 2023
FOR IMMEDIATE RELEASE
12 SEPTEMBER 2023
CHEMRING GROUP PLC
FY23 TRADING UPDATE AND CONTRACT WINS
Chemring Group PLC ("Chemring" or "the Group") today issues a
scheduled trading update for the period to 31 August 2023.
Current trading and outlook
Trading in the period has progressed as planned, with continued
strong order intake a notable highlight. This provides excellent
visibility out to FY25 . E xpected FY23 revenue is now fully
covered by the order book and the outturn for the year ending 31
October 2023 remains in line with the Board's and current analyst
expectations*. Achieving full year expectations is subject to US
Department of Defense ("US DoD") approval of certain countermeasure
deliveries, representing c.GBP25m of revenue, that have already
been manufactured and will be recognised once approval is received.
The US DoD is expected to grant approval subject to determination
of the quality of raw material provided by a third-party supplier
that is outside of the control of the Group. The Group is
supporting all parties in resolving this matter.
The Group has received a number of significant orders during the
period, detailed below. As at 31 August 2023, order intake for the
year to date was GBP536m (31 August 2022: GBP365m) and the order
book was GBP829m (31 August 2022: GBP575m). Encouragingly, order
cover for FY24 is building, with Countermeasures & Energetics
having 81% order cover of expected revenue and the shorter cycle
Sensors & Information sector having 54% cover.
Contract awards - Sensors & Information
Roke
In the Sensors & Information sector our specialist
consulting and technology business, Roke, has received a
significant award valued at GBP40m to deliver the next two years of
Project ZODIAC for the UK Ministry of Defence ("UK MOD"). ZODIAC is
the backbone of the British Army's Land ISTAR Programme, and will
deliver an integrated intelligence, surveillance, target
acquisition, and reconnaissance ("ISTAR") system, which will
transform how the Army undertakes data-led decision making in the
Land environment to gain operational advantage.
ZODIAC will provide an integrated and distributed system of
applications and underlying system architecture that will enable
the Army to understand, decide and act with greater precision and
speed and digitally integrate with key allied partners. Roke will
act as the Prime Systems Integrator on this advanced technology
programme supported by a supply chain of some of the world's
leading technology companies. The Group expects to see deliveries
under this contract commence late in FY23 with the majority
delivered in FY24 and early FY25.
Activity at Roke has remained extremely buoyant with order
intake in the year to date at GBP165m (31 August 2022: GBP124m) up
33%. As a result of this strong order intake we expect Roke to
achieve another record year in FY23, with revenue exceeding
GBP160m.
US Sensors
Having successfully completed a Low Rate Initial Production
("LRIP") Production Readiness Review and a supporting Manufacturing
Readiness Review in May, our US Sensors business has been informed
that the Milestone C procurement decision in respect of the Joint
Biological Tactical Detection System ("JBTDS") program has been
approved.
A LRIP contract, valued at $15m, was received in September 2023.
Hardware deliveries under this contract will be made over the next
10 to 14 months, with a Full Rate Production contract expected to
be awarded thereafter.
Contract awards - Countermeasures & Energetics
Energetics
In Energetics we continue to see increased levels of activity
and demand in the propellants and energetic materials markets as
customers re--evaluate their operational usage and stockpile
requirements associated with traditional defence capabilities.
Our Norwegian business, Chemring Nobel, continues to work with a
number of its customers, including Northrop Grumman, Diehl Defence,
Rheinmetall, and Nammo, on establishing long-term supply
agreements. Chemring Nobel now has a record order book, providing
significant visibility over the medium term.
In the US, our Chicago business has received multiple orders in
the period including two contracts totalling $23m to supply
critical components to Lockheed Martin, and a $11m order to supply
key parts on the United Launch Alliance ("ULA") Vulcan launch
system including flight-critical initiators, thrusters and
cartridges. Our Chicago business now has a record order book which
is in excess of $100m.
Our three niche Energetics businesses, which design and
manufacture high precision engineered devices and specialist
materials, continue to see strong customer demand with order intake
up 122% to GBP211m (31 August 2022: GBP95m). This strong
performance demonstrates the value that our customers place on
Chemring's niche products and reinforces our decision to invest in
expanding capacity at our Energetics sites.
Countermeasures
In Countermeasures we have continued to see sustained customer
demand from across our portfolio, maintaining our position as the
world leader in the design, development and manufacture of advanced
expendable countermeasures. In the year to date the Group's
Countermeasures businesses received orders totalling GBP141m (31
August 2022: GBP121m) and in the period since 30 April 2023 we
received the following notable awards: $17m for the delivery of
MJU-75 flares from our fully automated manufacturing facility in
Tennessee in support of the US DoD, and GBP24m for the delivery of
a range of countermeasure products in support of the UK MOD from
our facility near Salisbury.
Full year results date
As previously announced, the results for the year ending 31
October 2023 will be released on 12 December 2023.
Michael Ord, Chemring Group Chief Executive, commented:
"These significant order wins are illustrative of our leading
technological offering and the heightened customer demand that we
are seeing in response to increased global uncertainty. The growth
in order intake across both sectors demonstrates customer
confidence in Chemring to develop and supply highly effective
solutions, builds our order cover for FY24, and positions the Group
well for the future."
-S-
* The Group believes analyst forecasts for adjusted operating
profit for the year ended 31 October 2023 are in the range of
GBP65.2m to GBP68.2m, with a consensus of GBP66.9m.
For further information:
Rupert Pittman Group Director of Corporate Affairs, 01794
463401
Chemring Group PLC
James McFarlane MHP Communications 020 3128 8100
Ollie Hoare
Cautionary statement
This announcement contains 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 listed 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 2,600 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
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