Chemring Shares Trade Sideways on Its Latest FY Trading Update

The Chemring Group plc (LON: CHG) share price alternated between gains and losses and was finally trading flat for the day at 11:06 GMT following the release of its year-end, energetics and US sensors update earlier today. 

The global business provides advanced technology products and services to the aerospace, defence and security markets. The company announced that its operations in the year leading up to October 31, 2023, have unfolded as anticipated, aligning with the expectations of both the Board and analysts.

The firm expects its net debt as of the year-end to be approximately £14.4 million, compared to £7.2 million in 2022. Additionally, the company has increased dividends by a noteworthy 20% and successfully deployed £9 million into its £50 million share buyback program initiated on August 1, 2023.

The Group continues to thrive in favourable market conditions, marked by escalating customer demand for our cutting-edge technology-driven solutions and a resurgence in the desire for traditional defence capabilities. The optimistic growth outlook is expected to persist long-term, solidifying Chemring’s position as an industry leader.

Chemring was thrilled to report that the Group has witnessed a substantial surge in demand for energetic materials and devices. Notably, its Norwegian subsidiary, Chemring Nobel, secured orders exceeding £40 million in the final month of the fiscal year. 

Meanwhile, the company’s US-based subsidiary, Chemring Energetic Devices, celebrated a significant milestone with a $46 million order from United Launch Alliance (ULA) supporting their Vulcan Launch Vehicle.

In light of the heightened demand for energetic materials and its substantial organic growth opportunities, the Group has strategically decided to invest about £30 million in expanding Chemring Nobel’s capacity. 

The investment complements the £90 million capacity expansion plan announced across the firm’s three Energetics businesses in June 2023. The additional capacity is expected to generate approximately £25 million in incremental annual revenue.

Given the successful production phases of both of the Group's US DoD sole-source biological detection Programs-of-Record and the decision by the US Army to transition the Husky Mounted Detection System (HMDS) program into a sustainment phase, Chemring has conducted a strategic review of our US Sensors business. 

The company’s assessment indicates that focusing on biological detection and security markets offers the best opportunity to maintain robust margins and achieve sustained growth.

Chemring share price. 

The Chemring share price alternated between gains and losses and traded flat for the day at writing.