Chemring Shares Climb as Roke Signs US Radar Altimeter Deal Worth at Least $170m

Chemring (LON: CHG) shares rose after its Roke Manor Research subsidiary signed a multi-year partnering agreement expected to be worth at least $170m over the first five years. The company did not name the customer, describing it only as a major US prime contractor.

The shares were up 3.2% at 516p by 8.14am, after the 7am announcement, against yesterday’s close of 499.8p. That leaves them just below Monday’s close of 516.5p, but still about 20.7% below their high of the 10th of August.

Roke will supply its Nav-Sync Miniature Radar Altimeter, a commercial off-the-shelf unit. Chemring says it is the smallest and lightest radar altimeter of its type available for high-speed platforms and uncrewed air vehicles.

The company says an integrated antenna, proprietary software and signal-processing hardware give accurate altitude readings over land and sea in low-altitude, complex environments.

Only part of the value is committed. The initial production order is worth $16m and covers the first 12 months, with deliveries starting this month. The $170m is what Chemring expects over the first five years, and it expects the agreement to run to at least 2035. Both are expectations rather than firm orders.

Chief executive Michael Ord tied the deal to Roke’s position at home:

This agreement with a major US Prime Contractor is another milestone in Roke’s strategy to grow revenues from its growing portfolio of world-leading defence products and systems. It also demonstrates that, despite continued near-term headwinds in its domestic defence market, Roke continues to make progress in developing its international business, positioning it well for growth in the future.

Michael Ord, Chemring chief executive

The announcement carried no change to group financial guidance and gave no margin or profit figures for the contract.