Trading Update

RNS Number : 8869L

Chemring Group PLC

11 September 2019

 

FOR IMMEDIATE RELEASE                                                                                          11 SEPTEMBER 2019

CHEMRING GROUP PLC

TRADING UPDATE

Chemring Group PLC ("Chemring" or "the Group") today issues a trading update for the period to 10 September 2019.

Current trading

Trading in the period has progressed as planned and the Board's current expectations for the year ending 31 October 2019 remain unchanged. 

The Group's order book (continuing operations) at 31 August 2019 was £480m, providing good visibility for the remainder of the financial year and beyond.

Sector Update

Sensors & Information

The period has seen continued strong performance from the Sensors & Information sector.

The information security market, in which Roke is a leading participant, was buoyant in the period. Roke has been selected as a prime industrial partner on the UK MOD's Defence Science and Technology Laboratory's ("Dstl") SERAPIS framework. This six-year research framework focuses on new mission critical capabilities for C4ISR communication systems and networks, space systems, synthetic environments, and simulation technology. Roke has been awarded Lot 1 of six capability areas, and will also work with industrial partners on three other Lots.

US DOD deliveries have continued as planned on the Husky Mounted Detection System program, as has work on the Engineering Manufacturing Development phase of the Chemical & Biological Programs of Record.

Countermeasures & Energetics

Performance across the Countermeasures & Energetics sector has been in line with the Board's expectations.

Chemring Countermeasures USA ("CCM USA") was recently awarded four contracts in support of the US Navy and US Air Force. Initial deliveries under these contracts are expected in the 2019 financial year and provide a strong platform for 2020. The detail of these awards is covered in a separate announcement, released today.

The phased re-start of our UK Countermeasures business, CCM UK, progresses to plan. Spectral and MTV production lines returned to operation in the third quarter with planned steady state manufacturing expected by the end of the current financial year as previously disclosed.

CCM UK has also agreed a new supply framework agreement with the UK MOD. This is a seven year framework for the supply of air and naval countermeasures.

Following Chemring Australia's closure in the first half of our financial year to be fitted and qualified for F-35 countermeasure manufacturing, production resumed early in the second half and is ramping up to a three-shift production pattern to meet customer demands.

The niche Energetics businesses have continued to perform well, with order intake and deliveries remaining robust. The UK Energetics business, CEUK, is in advanced discussions with the UK MOD to establish a similar framework agreement to CCM UK for the supply of its energetic products.

Exit of Commoditised Energetics Businesses

On 24 June 2019 Chemring announced the completion of the sale of its pyrotechnics business Chemring Defence UK Limited for a nominal cash consideration.

A process to exit the Group's one remaining commoditised energetics business in Florida is ongoing and the Group will provide further updates when appropriate.

Financial position

Investment in safety and the modernisation and automation of our manufacturing sites has continued, and net debt at 31 August 2019 was £98m (30 April 2019: £84m). We expect the phasing of trading in FY19 to result in a weighting of operating cash generation to the final quarter.

Michael Ord, Chief Executive of Chemring, commented:

"This has been a busy period in which we have continued to make good progress and it is pleasing to see the execution of our strategy flow into the receipt of significant orders. Roke's selection as a prime partner to Dstl is evidence of the focused effort we have made to grow the business. The contract wins and long-term framework agreements in Countermeasures supports the Group's investment in its facilities, and position these businesses well for the future. Overall, we have good momentum as we head to the year end and the start of FY20."

-ENDS-

For further information:

Rupert Pittman            Group Director of Corporate Affairs,                          01794 833901

                                       Chemring Group PLC              

Andrew Jaques            MHP Communications                                                  0203 128 8100

Oliver Hughes

Cautionary statement

This announcement 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 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 2,500 people worldwide, and with production facilities in four countries, Chemring meets the needs of customers in more than fifty countries

·   Chemring is now 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.co.uk

 

END

 

 

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