Strong performances from sensors and information drove Chemring (CHG) back into profit at its half-year. But the defence contractor will be keeping the champagne on ice, after a previously reported manufacturing incident at its countermeasures facility in August caused a fatal injury to one of its employees and serious injury to another.
A phased restart is under way and a full production schedule is expected by the end of the financial year. Revenues for the division fell 6 per cent, while Chemring’s first-half results included £13m of insurance recoveries, which offset remediation and site operating costs. Management expects the site to contribute around £30m of revenue and break even after accounting for these additional costs. There was better news at the Australian counter-measures subsidiary, which secured two new contracts with the US Department of Defense in support of the F35 Joint Strike Fighter and other platforms.
Chemring expects a substantial second-half revenue bias, anticipating a 30/70 split between the first and second halves. These are almost all already in the books, with the group having secured 95 per cent of expected second-half revenue either in the order book or already delivered.
Broker Peel Hunt forecasts full-year 2019 pre-tax profits and earnings per share of £36.4m and 9.8p, respectively, rising to £50.6m and 13.6p in 2020.
| CHEMRING (CHG) | ||||
| ORD PRICE: | 157p | MARKET VALUE: | £440m | |
| TOUCH: | 156-157p | 12-MONTH HIGH: | 240p | LOW: 134p |
| DIVIDEND YIELD: | 2.2% | PE RATIO: | NA | |
| NET ASSET VALUE: | 104p* | NET DEBT: | 30% | |
| Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 133 | -1.1 | -6.8 | 1.1 |
| 2019 | 139 | 4.3 | 1.3 | 1.2 |
| % change | +5 | - | - | +9 |
| Ex-div: | 29 Aug | |||
| Payment: | 13 Sep | |||
| *Includes intangible assets of £164m, or 59p a share | ||||
