A streamlined Chemring (CHG) swung back into a full-year pre-tax profit, in a year that saw the defence engineer announce the sale of its ordnance division and sell its military products and defence arms. Its UK countermeasures site has resumed operation after an incident in August 2018 that caused one employee death and serious injury to another.
Chemring is now made up of two segments: sensors & information, and countermeasures & energetics. Management said that group performance beat expectations due to a strong year for the former division, which specialises in cyber security and electronic warfare. It fared particularly well in the US, where the segment benefited from the start of deliveries for a US government contract as well as a strong year for defence electronics business Roke. The division’s revenues leapt 51 per cent to £131.9m.
While Chemring’s countermeasures & energetics unit experienced a 3 per cent revenue decline, the group announced two contracts with the US government in support of the F-35 jet programme, which will have a maximum value of $66.9m (£50m).
House broker Investec forecasts 2020 pre-tax profits of £51m and earnings per share of 13.8p, rising to £55.9m and 15.2p in FY2021.
| CHEMRING (CHG) | ||||
| ORD PRICE: | 202p | MARKET VALUE: | £567m | |
| TOUCH: | 201.5-202p | 12-MONTH HIGH: | 215p | LOW: 134p |
| DIVIDEND YIELD: | 1.8% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 112p* | NET DEBT: | 25% | |
| Year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 377 | -9.1 | -2.4 | 2.1 |
| 2016 | 477 | 8 | 2.5 | 1.3 |
| 2017 | 548 | 4 | 1.1 | 3.0 |
| 2018 | 297 | -22 | -14.6 | 3.3 |
| 2019 | 335 | 26.7 | 8.2 | 3.6 |
| % change | +13 | - | - | +9 |
| Ex-div: | 2 Apr | |||
| Payment: | 24 Apr | |||
| *Includes intangible assets of £134m, or 48p a share | ||||
