Shares in Chemring Group (LSE:CHG) broke ranks with the wider defence sector on Tuesday, falling 1% to 475.5p after the countermeasures maker reported results for the past year and said capital investment in the coming year would increase.
For the year to 31 October 2025, revenue rose 2% to £497.5 million, while underlying operating profit increased 6% to £73.5 million, as margins were lifted to 14.8% from 14.3%. Profit before tax was up 31% at £67.7 million.
Cash conversion improved to 114% and the company ended the year with net debt of £89 million, which was said to reflect ongoing investment across the group.
Order intake rose 21% to £781.4 million, as flagged last month, supporting a record order book of £1.345 billion and providing strong revenue visibility.
Chemring said momentum in Countermeasures & Energetics remained firm, while Sensors & Information was affected by short-term delays in UK government spending.
Chief executive Michael Ord said: "The outlook for sustained defence spending remains strong. Growing geopolitical uncertainty is driving increased expenditure across our target markets, particularly within NATO, and Chemring is well positioned to capitalise on this demand, which we expect to persist well into the next decade."
Expectations for the 2026 operating performance are unchanged, although higher capital expenditure is anticipated, as well as higher finance charges related to increased investment in Norway.
Around 76% of expected 2026 revenue is already secured through the order book.