Chemring: UK defence firm forecasts decade of rearmament as war fuels record orders
An F-15E Strike Eagle deploys countermeasure flairs over Afghanistan. . (U.S. Air Force photo/Staff Sgt. Aaron Allmon)
Chemring has enjoyed a record six months of new orders as increasing geo-political tension around the globe drives government spending on defence.
The Hampshire-headquartered defence firm saw a record first half order intake of £345m, taking its total order book to £1bn, the highest in in its history.
It means investors in the defence contractor are set for a bumper payout as Chemring hiked its dividend 13 per cent to 2.6p per share.
Despite total revenue rising eight per cent to £223.4m, underlying profit fell five per cent to £25m. Chemring said this was down to the impact of “adverse weather conditions” on its Tennessee Countermeasures business, which builds infrared devices made to counter enemy attacks.
Michael Ord, Chemring Group chief executive, said: “The momentum seen in 2023 has continued with another period of record order intake and an order book of over £1bn, the highest in Chemring’s history.
“This strong order intake across both sectors has further increased our order cover for the second half of 2024 to 93 per cent and the Board’s expectations for the full year are unchanged.”
Ord said rising geopolitical tensions around the world had driven a “fundamental rearmaent upcycle which is expected to last for at least the next decade.
Wars in the Middle East and Ukraine have increased government’s military spending, boosting profit at defence firms such as BAE Systems and Lockheed Martin.
“This visibility, together with the support of grant funding and our customers’ desire to move to long-term partnering agreements, gives us the confidence to invest further in capacity and capability, reinforcing Chemring’s position as a key supplier to NATO, and positioning the Group well for the future,” Ord said.
Looking ahead, Chemring said it expects heavier weighting of operating profit in the second half as announced a target of increasing annual revenue to around £1bn by 2030.
Shares are up over 12 per cent this year to date, and over 46 per cent in the last 12 months.
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