Defence engineer Chemring (CHG) saw underlying operating profit from continuing operations more than double to £25.6m in the six months to 30 April. This came as operational performance in the ‘countermeasure and energetics’ division improved and its Australian and Salisbury facilities resumed operations – they had closed last year to be refitted for production for the F-35 fighter jet.
The 'sensors and information' division continued to secure orders from the US Department of Defence. This includes $32m (£25.5m) of additional orders for the next phase of its ‘indefinite delivery, indefinite quantity’ (IQIQ) contract for the Husky mounted detection system (HMDS). Post-period, the total value of this IQIQ was increased by $200m. With the group’s overall order book expanding by over a tenth since the October year-end to £504m, this covers around 95 per cent of expected revenue for the second half of the year.
Net debt reduced by a fifth from the 2019 year-end position to £61m, equivalent to 0.8 times cash profits (Ebitda) on a rolling 12-month basis. Meanwhile underlying cash generation from continuing operations more than doubled year-on-year to £56m. This was partly down to £15m of customer payments being brought forward into the first half of the year in response to Covid-19. While the dividend yield isn’t something to write home about, it is a sign of confidence in these turbulent times that the interim payout has been increased.
Peel Hunt anticipates adjusted pre-tax profit of £48m and EPS of 12.9p for the full year, up from £39.4m and 11p in 2019.
CHEMRING (CHG) | ||||
ORD PRICE: | 256p | MARKET VALUE: | £ 723m | |
TOUCH: | 255-256p | 12-MONTH HIGH: | 288p | LOW: 146p |
DIVIDEND YIELD: | 1.4% | PE RATIO: | 20 | |
NET ASSET VALUE: | 111p* | NET DEBT: | 19%** |
Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2019 | 139 | 4.3 | 1.3 | 1.2 |
2020 | 191 | 19.0 | 5.8 | 1.3 |
% change | +37 | +342 | +346 | +8 |
Ex-div: | 20 Aug | |||
Payment: | 11 Sep | |||
*Includes £131m in intangible assets or 46p a share, **Includes £6.2m in lease liabilities |