Chemring's full-year results showed little effect from delays in procurement as the flare and counter-measures manufacturer posted an 18 per cent increase in underlying operating profits to £135m, excluding amortisation charges and acquisition related costs which depressed the reported numbers, driven by greater sales of counter-IED measures. On an adjusted basis pre-tax profits increased 14 per cent to £117m. The order book is also improving and recently hit a record £902m, but the most significant announcement as far as management is concerned is the recent US commitment to increase the military budget by 3 per cent in 2012.
The complex part of Chemring over the past few years has been untangling the company's underlying growth from the demands created by operational commitments, but the picture here looks more encouraging as 20 per cent of sales in 2010 came from non-Nato countries, up nearly 8 percentage points. Non-Nato countries now represent a third of this year's order book. Meanwhile, the Afghan operation was behind the 88 per cent increase in counter-IED revenues to £115m after the US army ordered more mine-detecting radar systems.
Broker Investec Securities forecasts pre-tax profits of £151m and EPS of 311p (2010: £119m/247p). .
CHEMRING (CHG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 3,210p | MARKET VALUE: | £1.1bn | |
| TOUCH: | 3,203-3,209p | 12-MONTH HIGH: | 3,711p | LOW: 2,551p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 915p* | NET DEBT: | 95% | |
| Year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 188 | 31.8 | 70 | 16.0 |
| 2007 | 255 | 49.8 | 105 | 25.0 |
| 2008 | 354 | 57.7 | 123 | 35.0 |
| 2009 | 504 | 95.8 | 199 | 50.0 |
| 2010 | 597 | 89.1 | 189 | 59.0 |
| % change | +18 | -7 | -5 | +18 |
Ex-div:23 Mar Payment:15 Apr *Includes intangible assets of £432m, or 1,223p a share | ||||
