Defence company Chemring Group (LSE:CHG) PLC hiked its dividend 21% after reporting annual sales and profits higher than expected as military orders hit record levels.
Shares in the maker of missile countermeasures, ‘energetics’ and sensors fell 2% to 321p in early trading, having neared an 18-month high of 338p last week.
Revenues of £472.6 million for the 12 months to end-October were up 18% on the previous year as order intake grew 37% to £756 million, with the order book at its highest level in over a decade at £922 million.
Underlying profit before tax climbed 17% to £67.9 million and cash generation topped £75 million. A proposed final dividend per share of 4.6p made for a total dividend of 6.9p.
Trading since the start of November has been “in-line with plans”, said chief executive Michael Ord.
This, and with 79% of expected revenue for the new year covered by the order book, means the board's expectations for 2024 performance are unchanged, he said.
“The outlook for global defence markets is increasingly robust, with continued growth expected over the next decade. This growing visibility gives us the confidence to continue to invest for the future, balancing near-term performance with longer-term growth and value creation,” said Ord.
Broker Peel Hunt said revenue and profit were slightly better than expected, “driven by growth in both sectors but we note the demand side continuing to strengthen across the group as we head into FY24E”.
Analysts said net debt of £14.4 million was “leaving plenty of headroom for investment – notably additional capex planned for improving capacity in Energetics in particular”.