viewChemring Group

Chemring soars as first half beats expectations

The defence and security firm also announced an interim dividend of 1.3p, 8% higher than the prior year, alongside a triple-digit profit increase

Chemring Group - Chemring soars as first half beats expectations

Chemring Group PLC (LON:CHG) shares soared on Wednesday as the defence and security group reported figures for its first half that were ahead of expectations.

For the six months ended 30 April, the FTSE 250 group reported an underlying pre-tax profit of £24.2mln, 144% higher than the prior year, while revenues surged 37% to £191mln.

READ: Chemring commits to dividend as operations remain firing amid coronavirus

Chemring said all of its businesses had remained open despite the coronavirus pandemic, adding that it had seen a “significant reduction” in net debt during the year, which fell 28% to £60.6mln, as well as “strong operational cash generation”.

The firm also hiked its interim dividend by 8% to 1.3p per share and said its full year expectations were “unchanged, despite the challenging environment” as around 95% of its expected second half revenues were in the order book or have been delivered in the period to date.

"As a global team we are working to build a stronger and higher quality business, and the resilience the Group has demonstrated during the coronavirus pandemic shows we are making solid progress. Despite the changing and challenging environment in which we are currently working, we have delivered a strong performance in the first half of the year”, said chief executive Michael Ord.

In a separate announcement, the company also said it has appointed Fiona MacAulay, the former chief executive of Echo Energy PLC (LON:ECHO), as a non-executive director with immediate effect.

In a note, analysts at Peel Hunt upped their target price for Chemring to 250p from 220p and retained their ‘add’ rating on the stock, saying the company was “weathering the [coronavirus] storm well and the longer-term outlook is also looking reassuring”.

“The balance sheet is robust, and the fact the Board feels it is in a position to still be able to recommend a progressive dividend is an encouraging signal of confidence”, the broker said.

Shares in Chemring were 24.8% higher at 266.5p in mid-morning trading.

Quick facts: Chemring Group

Price: 241.5 GBX

Market: LSE
Market Cap: £680.76 m

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