Chemring warns annual forecasts will rely on the US Department of Defense approving a £25m order
- Chemring is waiting for the US DoD to approve ‘countermeasure deliveries’
- The Hampshire-based firm’s order book stood at £829m at the end of August
- Its portfolio of products includes IED detectors, flares and aircraft safety parts
Chemring has said achieving its full-year expectations will be dependent on the US government signing off orders worth around £25million in revenue.
Analysts anticipate the defence contractor reporting an adjusted operating profit of between £65.2million and £68.2million for the 12 months ending October.
But the firm said it is waiting for the US Department of Defense to give the thumbs up to ‘certain countermeasure deliveries’ that have been manufactured and will be acknowledged once approval is made.
Anticipation: Chemring is waiting for the US Department of Defense, based in the Pentagon (pictured), to give the thumbs up to ‘certain countermeasure deliveries’
It added that the DOD’s rubber-stamping of the orders will depend on the ‘quality of raw material’ provided by a third-party supplier that is not within its control.
Chemring made the warning alongside figures showing the value of new orders received by the group was £536million at the end of August, nearly 50 per cent up on the same point last year.
Meanwhile, its order book stood at £829million, compared to £575million in August 2022, and now fully covers expected turnover for the current financial year.
Among the contracts it has recently won include a £40million two-year deal for work on Project Zodiac, a major element of the UK Ministry of Defence’s Land ISTAR Programme.
In the United States, Chemring’s Chicago business gained contracts to provide vital parts to Lockheed Martin and the United Launch Alliance Vulcan launch system.
It has also won a $17million deal for MJU-75 flares manufactured at its Tennessee plant and a £43million arrangement to supply components for the Next Generation Light Anti-Tank Weapon system.
Michael Ord, chief executive of Chemring, said: ‘These significant order wins are illustrative of our leading technological offering and the heightened customer demand that we are seeing in response to increased global uncertainty.
‘The growth in order intake across both sectors demonstrates customer confidence in Chemring to develop and supply highly effective solutions, builds our order cover for FY24, and positions the group well for the future.’
Chemring’s portfolio of products includes IED detectors, aircraft safety parts, flares and decoys that protect platforms and ships from heat-seeking missiles, and high-energy explosive materials.
Russia’s invasion of Ukraine has triggered a surge in military spending by NATO member states looking to supply Ukrainian troops while while simultaneously building up their own forces..
This has provided a significant financial windfall for the UK aerospace and defence sector, which has further benefited from rising concerns about China’s aggressive posture towards Taiwan.
Chemring Group shares had dropped by 6.6 per cent, or 20p, to 284.5p during the late afternoon on Tuesday, making them the biggest faller on the FTSE 250 Index.