Chemring backs full-year expectations

(Sharecast News) - Chemring backed its full-year expectations on Wednesday as it said current trading has been in line with expectations in both segments and that it had not seen a material impact to its business yet from the coronavirus outbreak.
In an update ahead of its annual general meeting, the company said it continues to make good progress in the execution of its strategy and is well placed to take advantage of the growth opportunities available.

"The backdrop of continued geopolitical unrest supports the need for government spending on defence and national security in all our target markets," it said.

In the key US market, current defence spending, future 2021 budget and longer-term projections to 2025 remain at high levels, it noted, adding that 2020 defence budget may lead to the US Department of Defence buying additional F-35 Joint Strike Fighters.

Chemring said continuing order intake in the period to 29 February 2020 was ?132m, up from ?120m in 2019, with a book to bill ratio of 125% versus 154% a year ago. Meanwhile, the order book for continuing operations stood at ?478m at 29 February compared to ?421m a year earlier.

In the sensors & information business, Roke continues to see growing demand for its services and the US Programs of Record continue to progress in line with the group's expectations.

In the countermeasures & energetics division, Chemring's Australian facility has successfully delivered its first batches of training countermeasures for the F-35 program to the US Department of Defence and has begun production of the first batch of operational countermeasures.

The company said its UK facility continues to ramp up output following the phased restart in 2019 and is now focused on operational efficiency. In the US, its focus has been on its capital investment programme in Tennessee which, when commissioned in the second half of next year, will provide additional automated capacity for the manufacture of F-35 countermeasures.

Chemring said the coronavirus outbreak is not currently having any material impact on its businesses or supply chains. However, it is monitoring the situation "closely".