Interim Management Statement

RNS Number : 0450B

Chemring Group PLC

27 February 2014

 



FOR IMMEDIATE RELEASE                                                                                             27 FEBRUARY 2014

CHEMRING GROUP PLC

INTERIM MANAGEMENT STATEMENT

Chemring Group PLC ("Chemring" or "the Group") today issues its Interim Management Statement covering the period from 1 November 2013 to date.

Current trading

As anticipated, the challenging market conditions the Group continues to experience across its operations, combined with the effect of adverse foreign exchange movements, has resulted in revenue during the three month period to 31 January 2014 falling to £118.3 million compared with £136.1 million in the same period last year.

The Group's order intake increased by 2.1% against the comparative period, helped by an increasing penetration of non-NATO markets. The order book at 31 January 2014 was £644.5 million, unchanged in the first quarter, after adjusting for the effects of foreign exchange and disposals. Of the order book at 31 January 2014, 55.6% is due for delivery in the current financial year.

Countermeasures

The Countermeasures businesses continued to stabilise, with revenue in the three month period to 31 January 2014 being 1.8% below last year, indicating that customer demand is reaching minimum sustaining volumes. Order intake remained slow, with a number of customers deferring the placement of orders.

Regrettably, on 22 February 2014, an incident at the Kilgore facility in Tennessee resulted in one of our employees being fatally injured. The incident caused damage to parts of Kilgore's manufacturing operations and production is currently suspended. An investigation into the cause of the incident has been launched. A gradual re-start of manufacturing operations is expected during the first week of March 2014.

Sensors & Electronics

Against a strong comparative period, revenue from Sensors & Electronics was 10.7% lower than the same period last year, reflecting the scheduling of demand for the Husky Mounted Detection System ("HMDS") from the US Department of Defense ("DoD"). Order intake included demand for HMDS spares from the Canadian Army and orders from the US DoD for biological detection systems. A final order under the HMDS Indefinite Delivery Indefinite Quantity ("IDIQ") contract is expected to be received in the second half of the current financial year.

Pyrotechnics & Munitions

Revenue in Pyrotechnics & Munitions was 16.5% lower than the same period last year, reflecting the timing of deliveries to Middle East customers. There was however a marked improvement in revenue and operational performance at Chemring Ordnance. Order intake at the Munitions businesses improved, primarily due to the receipt of significant orders from Middle East customers.

Energetic Sub-Systems

Revenue in Energetic Sub-Systems was 25.9% below the same period last year, partly due to the phasing of activity which will be more heavily weighted toward the second half of the current financial year. The Group continues to focus on resolving production issues and integrating manufacturing sites. Order intake, whilst marginally lower than the comparable period, showed an improving performance from the European businesses.

Current financial position

The Group's net debt at 31 January 2014 was £253.8 million, an improvement of £32.1 million on the position at 31 January 2013. A modest rise in working capital since the financial year end is the result of expected seasonal fluctuations. Proceeds of £6.1 million ($10.0 million) from the sale of the Clear Lake facility were received on 24 January 2014.

Outlook

The process of reshaping and strengthening the Group's portfolio of businesses through the disposal of non-core activities is ongoing; however, market conditions are expected to remain challenging.  Chemring continues to pursue opportunities for growth, together with a focus on improvements in operational performance and restructuring businesses.

The Board's expectations for the current financial year remain unchanged from those outlined in the 23 January 2014 results announcement, subject to fluctuations in exchange rates.

-ENDS-

For further information:

Mark Papworth           Group Chief Executive, Chemring Group PLC             01489 881880

Steve Bowers              Group Finance Director, Chemring Group PLC            01489 881880

Rupert Pittman           Group Director of Communications and

Investor Relations, Chemring Group PLC                    01489 881880

Andrew Jaques            MHP Communications                                                0203 128 8100

John Olsen

James White  

Cautionary statement

This announcement is based on unaudited information and contains 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 manufacturing business with facilities in seven countries, selling high technology electronics and energetic products to over sixty countries worldwide.

•   Chemring has a diverse portfolio of products protecting military people and platforms against constantly changing threats.

•   Operating in niche markets with short product development timescales, Chemring has the agility to react rapidly to urgent customer needs.

•   Strong research and development investment in new products and improvements in technology enable Chemring to expand its addressable markets.

www.chemring.co.uk

 

END

 

 

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