Chemring interim profit, revenue increase; 2022 guidelines supported

defense technology company chemring on Wednesday posted a rise in its profit and intermediate income and increased its dividend, as it supported its expectations for 2022.

In the six months to April 30, underlying pre-tax profit rose 22% to £33.1m and revenue rose 11% to £220.4m. The interim dividend was raised by 19% to 1.9pa per share.

Chemring said its performance was in line with board expectations, with strong performance in both segments.

In the Sensors & Information segment, Roke continued the recent trend of double-digit growth in orders, revenue and operating profit in a positive market.

In Countermeasures & Energetics, underlying operating margin increased from 15.6% to 16.4% due to improved operational execution across the segment, he said.

Chemring maintained its expectations for the year. He said about 85% of expected second-half revenue was in the order book as of April 30 or had been delivered to date.

“Utilities inflation, discretionary investment in Roke in the second half and unfavorable U.S. order timing should offset current currency tailwinds and an expected improvement in the first half weighting in 2022,” did he declare.

Chemring also said the delay in passing the US Department of Defense budget has slowed down the process of doing business with departments and as a result some orders expected in the second quarter have been delayed.

“Given the level of second half revenue backlog coverage, this is not expected to impact FY22 results, but may negatively impact the timing of the first half/second half. of fiscal year 23,” he said.

Chief Executive Michael Ord said: “The current geopolitical uncertainty, caused by Russia’s invasion of Ukraine, has highlighted the need for increased defense spending, particularly among European members of the NATO. More broadly, it highlighted the need for countries to retool. and modernize their defense capabilities to deal with the threat of peer conflict.

“Against this backdrop, and with innovative, market-leading technologies and services that are critical to our customers, I am confident that Chemring will continue to drive both organic and inorganic growth, balancing near-term performance with the creation of long-term value.

As of 09:35 BST, shares were down 6.8% at 341p. Shares are up 15% year-to-date, having benefited from Russia’s invasion of Ukraine.

Jefferieswhich rates the stock as “hold,” said the lack of FY22 adjusted operating profit upgrade, despite first-half results accounting for 53% of FY22F consensus, ” come as a surprise, but it reflects investment in Roke’s future growth and delayed contracts in the US.”

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