TIDMCHG
RNS Number : 9963S
Chemring Group PLC
10 November 2023
FOR IMMEDIATE RELEASE
10 NOVEMBER 2023
CHEMRING GROUP PLC ("Chemring", the "Group" or the
"Company")
FINANCIAL YEAR-END, ENERGETICS AND US SENSORS UPDATE
FY23 Year-End Update
Chemring is pleased to announce that trading in the period to 31
October 2023 progressed as planned with the outturn for the year
ending 31 October 2023 expected to be in-line with Board and
analyst expectations*.
Net debt at year end is expected to be approximately GBP14.4m
(2022: GBP7.2m). Strong operating cash conversion of 90% of EBITDA
(three year average: 101%), has been used to fund growth
opportunities, both organic and bolt-on, increase dividends by 20%,
and deploy GBP9m into the GBP50m share buyback programme announced
on 1 August 2023.
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. This
robust growth outlook is expected to be maintained over the long
term.
Energetics Contract Awards and Further Capacity Expansion
The Group continues to experience significant increases in
demand for energetic materials and devices, with its
Norwegian-based subsidiary Chemring Nobel winning over GBP40m of
orders in the final month of the year, and its US-based subsidiary
Chemring Energetic Devices winning a $46m order from United Launch
Alliance ("ULA") in support of their Vulcan Launch Vehicle.
Considering the increased levels of demand for energetic
materials and the strong organic growth opportunity this presents,
the Group has decided to invest a further cGBP30m in increasing the
capacity of Chemring Nobel. This investment, which is in addition
to the cGBP90m capacity expansion plan across the Group's three
Energetics businesses that was announced in June 2023, is expected
to deliver cGBP25m of incremental annual revenue. The total
investment in increased capacity in the Group's three Energetics
businesses over the next three years is expected to be cGBP120m,
which will generate increased revenue of cGBP85m and increased
operating profit of cGBP21m.
Strategic Review of US Sensors
With both of the Group's US DoD sole-source biological detection
Programs-of-Record now in production phases**, and following the US
Army's decision to curtail production of the Husky Mounted
Detection System ("HMDS") and accelerate the transition of the
program into a sustainment phase, and our assessment that it is no
longer probable the Group will proceed to the next phase of the
competitive Aerosol and Vapor Chemical Agent Detector ("AVCAD")
program, the Group has conducted a strategic review of its US
Sensors business and concluded that a focus on biological detection
and security markets presents the best opportunity to maintain
strong margins and deliver growth.
As a result, the Explosive Hazard Detection ("EHD") business
will be treated as a discontinued operation in 2023 with a non-cash
impairment of the goodwill associated with its acquisition in 2009,
and other assets, totalling GBP31m being recorded. Also, a non-cash
(pre-tax) impairment of the previously capitalised AVCAD
development costs and other assets associated with the program
totalling GBP18m has been recorded as a non-underlying item; given
its competitive nature the Group had not included any AVCAD program
revenues in its forecasts.
The Group has moved quickly and decisively to reposition and
reshape its US Sensors business to ensure sustainable competitive
advantage in its targeted biological detection and security
markets.
FY23 Results
Chemring's FY23 results are scheduled to be announced on 12
December 2023.
-ENDS-
* The Group believes the consensus of analyst forecasts for
adjusted operating profit for the year ended 31 October 2023 is
GBP67.0m.
** The Enhanced Maritime Biological Detector ("EMBD") is now in
full rate production and the Joint Biological Tactical Detection
System ("JBTDS") is in low rate initial production.
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 FTSE250 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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END
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