Chemring Group (LSE:CHG) PLC has reported a strong set of financial results, which exceeded its initial expectations, driven by a strong performance across both its Sensors and Countermeasures and Energetics divisions despite a challenging macro-economic environment.
Revenue for the year to 31 October 2022 rose 13% to £442.8mln, while underlying operating profit increased 11% to £64.0mln with operating margins flat at 14.5% (2021: 14.6%), as expected, given the operating expense investment in Roke.
“Given the moving parts in the demand profile and production challenges we see this as an impressive performance,” analysts at Peel Hunt commented.
Revenues at Roke exceeded £100mln for the first time and Chemring said with an order intake of £168mln, up 59%, it is well positioned to “continue its growth trajectory in what continues to be a buoyant market”.
Order intake for Countermeasures and Energetics was £356mln, up 40%, driven by multi-year orders received across the sector, Chemring stated.
Shareholders were rewarded with a 19% increase in the final dividend to 3.8p, giving a total pay-out of 5.7p.
Expectations for the fiscal year 2023 are unchanged with around 86% of expected revenue covered by the order book.
Michael Ord, group chief executive, commented: “Trading since the start of the current financial year has been in line with expectations. With 86% of FY23 expected revenue covered by the order book, the board's expectations for FY23 performance are unchanged.”
“The global political landscape and focus areas of defence and security spending underpin our confidence in the story and we reiterate our buy recommendation and 410p target price,” Peel Hunt said.