REG - Chemring Group PLC - AGM Update

ChemringAnnouncement

26/02/2025 07:15

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250226:nRSZ4433Ya&default-theme=true

RNS Number : 4433Y  Chemring Group PLC  26 February 2025

FOR IMMEDIATE
RELEASE
                               26 FEBRUARY 2025

 

CHEMRING GROUP PLC ("Chemring", the "Group" or the "Company")

AGM Update

Chemring, the international manufacturing and technology company that supplies
high-reliability products and innovative services into growing areas of
Defence, Security, and Space markets, issues the following update ahead of its
Annual General Meeting taking place later today.

Key points:

·     FY25 outlook in line with expectations.

·     Order book at 30 January 2025 of £1,351m (30 January 2024:
£991m).

·     Q1 order intake of £393m. Significant orders received across both
sectors.

·    Expected FY25 revenue 81% covered by Q1 revenues and current order
book. Outer years cover continuing to build.

·     The market opportunity for Chemring continues to grow.

·     New £40 million share buyback programme commenced.

 

Michael Ord, Group Chief Executive, commented:

"The current financial year continues to plan and our outlook remains in line
with market expectations. Our order book is at a record level and order intake
across both sectors benefitted from the receipt of several significant orders,
demonstrating continued customer demand and confidence in Chemring's market
leading products and services. The Group is increasingly well positioned, with
a strong and sustainable platform for future growth. Given the Board's growing
confidence in the long-term potential of the Group it has decided to commence
a new share buyback."

 

Current trading and outlook

The Board's expectations for the Group's FY25 outlook remains in line with
market expectations* with (as previously stated) a similar H2 weighting to
last year.

Order intake since 31 October 2024 was £393m, an increase of 187% on the
prior year (30 January 2024: £136.9m).

With the new administration in the US pushing for significant increases in
NATO defence spending and with EU member states recognising the critical need
to scale up and co-ordinate defence production across Europe, the market
opportunity for Chemring continues to grow. This presents significant
opportunity for the Group's products and services, reinforcing the decision to
invest, supported by our customers, in increasing capacity and capability to
meet sustained long term market demand.

We continue to assess further new capacity expansion opportunities together
with associated customer funding, alongside bolt-on acquisition opportunities.

We remain on track to achieve our ambition of increasing annual revenue to
c.£1bn by 2030, generating mid-teen margins in the medium term.

Orders

The order book at 30 January 2025 was £1,351m (30 January 2024: £991m).
Having started the financial year with order cover of 77%, Group expected FY25
revenue is now 81% (30 January 2024: 87%) covered by revenue generated in the
period to date and the current order book.

In our Sensors & Information ("S&I") sector Roke has seen continued
momentum within its defence services and products business with c.£56m of
framework agreements and awards received in Q1. Further wins in the area of
Electronic Warfare ("EW") include an initial £6m contract with Egypt for the
delivery of Roke's Perceive, Resolve and Locate EW systems. Export licence
approval is expected over the coming weeks, at which point the order will be
taken to the order book. Roke continues to see significant interest from
European states and Japan, with further EW orders expected to be received in
the coming months.

Other notable events include the receipt of a multi-year agreement with a
major US Prime Contractor for the supply of its high-speed Miniature Radar
Altimeter ("MRA"). With a value of at least £26m (US$32m) over four years,
this agreement is illustrative of Roke's strategic focus on growing revenues
from its portfolio of world-leading high margin defence products and systems.
It also demonstrates the critical role Chemring plays in multiple space and
missiles programmes is not solely confined to our Energetics businesses.

In the US, Chemring Sensors & Electronic Systems ("CSES") has been awarded
the fourth production option as part of the Full Rate Production contract for
the Enhanced Maritime Biological Detection ("EMBD") Program of Record. The
EMBD system is an advanced sensor system to rapidly detect, collect and
identify airborne biological warfare agents. The total value of the
production option is $15m with deliveries being made in the fourth quarter of
FY25 and completing in FY26. The customer is the US Department of Defense and
all work under this contract will be performed at CSES's facility at
Charlotte, North Carolina.

Having started the year with 48% cover, the S&I sector's FY25 expected
revenue is now 54% covered by revenue generated in the period to date and the
current order book (30 January 2024: 74%). Order intake within S&I has
progressed as expected during the current financial year.

In our Countermeasures & Energetics ("C&E") sector we continue to see
increasing levels of demand for propellants and energetic materials. In
Norway, our energetic materials business, Chemring Nobel, signed a three-year
supply agreement with SAAB Switzerland for the supply of HMX. This contract,
valued at £36m, will see deliveries being made in 2028 - 2030.

In the UK, our Scotland based business Chemring Energetics UK ("CEUK")
received an order valued at £23m for the delivery of critical components used
in the Next Generation Light Anti‐Tank Weapon system ("NLAW"). This award is
a follow-on to the £43m contract that CEUK received from SAAB in March 2023.
The Group expects to see deliveries under this contract commencing in 2026 and
continuing into 2027.

Having started the year with 97% cover, the C&E sector's FY25 revenue is
now 98% covered by revenue generated in the period to date and the current
order book (30 January 2024: 94%).

Strategic aims

As previously communicated, Chemring's strategic imperatives are threefold -
i) grow, through the investment in capacity, technology and people to drive
organic growth, ii) accelerate, through the investment in value-enhancing
bolt-on acquisitions to accelerate growth, and iii) protect, by investing to
protect sole-sources and marketing leading positions. This all supports the
Group's ultimate strategic ambition to increase its annual revenue to c.£1bn
by 2030 whilst balancing near-term performance with longer-term growth and
value creation.

Capital allocation

As laid out as in the Group's FY24 results, the four key tenets of Chemring's
capital allocation policy are as follows:

1.   Investment in the business, including investment in the Energetics
businesses to capitalise on unprecedented demand and continual capex
investment to increase automation, enhance safety and drive margin
improvement;

2.   Focused M&A centred on incremental bolt-on acquisitions that
complement existing capabilities and accelerate growth in customer priority
areas;

3.   Dividends, targeting annual dividend cover of 2.5x; and

4.   Return of surplus capital to shareholders.

The overall objective of Chemring's capital allocation policy is to maintain a
resilient balance sheet with leverage of <1.5x. Based on current market
expectations FY25 leverage is expected to be around 1x during a period of
significant investment.

Commencement of £40 million share buyback programme

In light of the Group's capital allocation policy, the Board announces that it
will commence a share buy-back programme for its ordinary shares ("Shares")
for up to a maximum consideration of £40 million (the "Programme"). The
Programme will commence today and end no later than the 2027 AGM. The purpose
of the Programme is to reduce Chemring's share capital, and it is intended
that Shares purchased under the Programme will be cancelled.

Further details on the buyback programme are included in Appendix 1 to this
announcement.

 

Interim results date

The Group will report its interim results for the six months ended 30 April
2025 on 3 June 2025.

- ENDS -

 

* The Group believes the current consensus of analyst forecasts for FY25 are
for:

- revenue of £540m;

- underlying operating profit of £75.9m; and

- underlying EPS of 20.0 pence.

 

For further information:

 

Rupert Pittman           Group Director of Corporate Affairs,
          01794 463401

Chemring Group PLC

 

James McFarlane        MHP Group
                                07584 142665

Ollie
Hoare
07817 458804

 

Cautionary statement

This announcement may contain 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 FTSE-250 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 2,700 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 (http://www.chemring.com)

 

Appendix 1. Notes to the share buyback programme

The Company has entered into an irrevocable, non-discretionary instruction
with Investec Bank plc ("Investec") to conduct the Programme on its behalf and
carry out on-market purchases of Shares and to on-sell such Shares to
Chemring.

Investec will make trading decisions in relation to the Programme
independently of, and without further instruction from, Chemring. Any purchase
of Shares contemplated by this announcement will be executed in accordance
with the Company's general authority to repurchase Ordinary Shares granted by
its shareholders at the annual general meeting held on 23 February 2024 (which
received 99.07 per cent approval) and future annual general meeting approvals,
Chapter 9 of the Financial Conduct Authority's UK Listing Rules, Article 5(1)
of the Market Abuse Regulation (EU) No 596/2014 (as it forms part of domestic
law by virtue of the European Union (Withdrawal) Act 2018, as amended), the
Commission Delegated Regulation (EU) No 2016/1052 (as it forms part of
domestic law by virtue of the European Union (Withdrawal) Act 2018, as
amended), and other applicable laws. The Programme may on any given day exceed
25 per cent of the average daily trading volume on each trading platform on
which the Shares are traded. Accordingly, the Company may not benefit from the
exemption contained in Article 5(1) of MAR.

The Company will announce all transactions in Shares pursuant to the Programme
by no later than 7.30 a.m. on the business day following the calendar day on
which such transaction occurred.

At the time of this announcement, the Company's share capital comprises
273,112,620 Ordinary Shares with voting rights.

Appendix 2. Group overview

Chemring is a specialist manufacturing and technology business creating
market-leading innovative solutions to meet its customers' complex needs. This
is achieved by innovating at every stage of the value chain, from research and
development ("R&D") through to design, manufacture and in-service support,
working closely with its customers to deliver products, services and solutions
for mission-critical success.

The Group operates across two strategic products segments, Countermeasures
& Energetics and Sensors & Information.

Countermeasures & Energetics

Chemring is the world leader in the design, development and manufacture of
advanced expendable countermeasures for protecting air and sea platforms
against the growing threat of guided missiles. Its niche, world-class
energetics portfolio provides high-reliability, single-use devices that
perform critical functions for the space, aerospace, defence and industrial
markets. It is critical supplier of specialist materials including propellant
and energetic materials that are used in a wide variety of applications in the
defence and civil markets.

Sensors & Information

The Sensors & Information sector, including Chemring's Roke business,
continues to invest in technologies that safeguard and protect in an uncertain
world, enabling clients to deliver competitive advantage, defend their people,
assets and information, and defeat their adversaries.

The Group's customer base spans national defence organisations, security and
law enforcement agencies, as well as commercial markets such as space and
transport. It supports its customers in more than fifty countries across the
globe from its home markets of the United Kingdom, the United States,
Australia and Norway.

 

 

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDEAPASADXSEFA