Chemring Group (LSE:CHG), a provider of technology-driven solutions for the defence and security markets, said today that trading in the year ending 31 October 2023 was in line with expectations and that it reduced net debt to £14.4 million.
Analysts’ consensus forecast is that Chemring will deliver approximately £67 million of adjusted operating profit for the year.
The group reported significant increases in demand for its energetic materials and devices, which are used for propulsion, pyrotechnics and explosives.
It secured over £40 million of orders from its Norwegian subsidiary Chemring Nobel in the final month of the year and its US subsidiary received a US$46 million order from United Launch Alliance for the Vulcan Launch Vehicle.
To capitalise on this growth opportunity, the group said it has decided to invest a further £30 million in increasing the capacity of Chemring Nobel, which is expected to generate about £25 million of incremental annual revenue.
This is in addition to its £90 million capacity expansion plan across three of its Energetics businesses that was announced in June 2023.
The group also said it has conducted a strategic review of its US Sensors business, which provides biological and chemical detection systems.
It has concluded that it will focus on biological detection and security markets, which offer strong margins and growth potential.
As a result, it will treat its Explosive Hazard Detection business as a discontinued operation and record a non-cash impairment of £31 million.
It will also record a non-cash impairment of £18 million related to the Aerosol and Vapor Chemical Agent Detector programme, which it has decided not to pursue further.
The group’s full-year results are scheduled to be announced on 12 December 2023.