Chemring PLC (LON:CHG) has continued its recovery after a tough time last year, with the defence contractor seeing its first-half losses reduced as revenues grew strongly, and it reinstated its interim dividend.
In its results for the six months ending in April 30, the small cap firm reported a statutory loss before tax of £6.8mln, an improvement on the £16.8mln loss at the same stage last year, while its underlying profits rose to £17.2mlm, up from £3.8mln.
READ: Chemring withdraws AGM plan for changes to directors pay, says year has "started positively"
The reduction came as Chemring’s revenues grew to £249.6mln, up from £180.1mln a year earlier, helped in part by the post-Brexit vote drop in sterling.
Chemring’s CEO Michael Flowers said: “In the first half of 2017 the Group has continued to build on its H2 2016 performance, with solid order intake and revenue delivery from its operations.
“The consistency of manufacturing operations across all sites continues to improve, delivering more predictable revenue flow and improved margins.”
The maker of ammunition, flares and surveillance systems had a rough run last year, warning on profits and requiring a rights issue cash injection in 2016.
Chemring’s board has “confidence in the Group's future outlook”
But Chemring said today that its board have “confidence in the Group's future outlook”, with approximately 85% of expected second half revenue in its order book, and full-year expectations for remain unchanged.
Showing its improved confidence, Chemring reinstated its interim dividend with a 1.0p a share payout.
In a post-results note to clients on Chemring, analysts at Liberum Capital said: “Recovery is underway, new opportunities are developing and key US defence programmes are progressing, which should help lift the rating from the current CY17 EV/EBIT of 11x.”
Chemring’s reacted positively as well in early morning trading, adding 1.2%, or 2.25p at 188.5p.
In March, Chemring saw its plans for changes to directors pay shot-down ahead of its Annual General Meeting, withdrawing the proposals following consultations with shareholders.
In a trading update then, company had also said it had “started the year positively, continuing the momentum of the second half of last year.”