Interim Management Statement

RNS Number : 4431Y

Chemring Group PLC

01 March 2012

 



FOR IMMEDIATE RELEASE                                                                        1 MARCH 2012

CHEMRING GROUP PLC

INTERIM MANAGEMENT STATEMENT

Chemring Group PLC ("Chemring" or "the Group") today issues its Interim Management Statement covering the period from 1 November 2011 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.

Current Trading

Revenue during the first three month period was £137 million (2011: £136 million), in line with the Board's expectations. Strong growth was generated in our munitions and countermeasure businesses, offset by reductions in our counter-IED and pyrotechnics divisions. 72% of the expected revenue for 2012 is now covered by firm orders.

The Group's order book is currently at a record high of £997 million, 6% higher than last year, reflecting the good growth in orders for pyrotechnics and munitions, which has been offset by delays in order intake from the US. As expected, the order book at NIITEK is currently £50 million lower than last year, due to the extended timescales for the negotiation of the multi-year contract for spares and support for the existing Husky Mounted Detection System ("HMDS") fleet. 

Countermeasures

Our countermeasures business showed good growth, with revenue 17% higher than for the same period last year. Strong growth was achieved at Kilgore, with revenue up 63%, despite a delayed start to production in the new facility for MJU-7 flares, which are used to protect    F-16 aircraft. This was offset by lower revenue at our UK facility in Salisbury, where production of new naval rounds has continued to be delayed by technical issues with the payload manufacture.

Munitions

Our munitions business increased its revenue by 56% compared with last year, with good growth from Simmel, Mecar and Chemring Australia. The majority of the munitions sales were to non-NATO countries.

Counter-IED

Revenue from our counter-IED business was 37% lower than for the same period last year, reflecting a temporary pause in demand for systems, spares and support for the HMDS from the US Department of Defense. After completion of the two major systems delivery contracts in 2011, final negotiations are now underway for the multi-year contract to support, upgrade and replace over 240 systems currently in service. The contract award is expected by the end of April 2012.

Pyrotechnics

Revenue in our pyrotechnics business reduced by 16% compared with last year, principally

reflecting the timing of contracts for our 81mm illumination mortar rounds, which are used by the British Army. A new contract, worth €38 million, covering production over the 2012 to 2014 timeframe was received in January 2012, and deliveries will commence in the second quarter.

Current Financial Position

The Group's net debt at the end of January 2012 stood at £317 million (January 2011: £342 million). The net debt is expected to be lower by the half year. 

Board of Directors

The Board also announces that Paul Rayner will step down from the Board no later than 31 July 2012. Mr Rayner has been with the Group since 1994 and has been Finance Director since 1999. A search is underway for his successor.

For further information:

Dr David Price	Chief Executive, Chemring Group PLC	0207 930 0777
Paul Rayner	Finance Director, Chemring Group PLC	0207 930 0777
Rupert Pittman	Director of Communications and Investor Relations, Chemring Group PLC	07976 249289
Anthony Cardew/ Lauren Foster	Cardew Group	0207 930 0777

Cautionary Statement: 

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and Chemring's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, changes to customer ordering patterns, delays in obtaining customer approvals for engineering or price level changes, the failure of one or more key suppliers, the outcome of business or industry restructuring, the outcome of any litigation, changes in economic conditions, currency fluctuations, changes in interest and tax rates, changes in raw material or energy market prices, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects.

Chemring undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

Notes to Editors:

•     Chemring is a manufacturing business with facilities in eight countries selling high technology electronics and energetic products to over eighty countries worldwide.

•     The Company has a diverse portfolio of products protecting military people and platforms against a constantly changing threat.

•     Operating in high margin, niche markets with short product development timescales, Chemring has the agility to rapidly react to urgent customer needs.

•     Chemring adopts a balanced strategy of organic growth and small bolt-on acquisitions, and maintains balanced geographic and market profiles, with a growing presence in non-NATO countries.

•     Strong R&D investment for new products and improvements in technology continually allows Chemring to expand its addressable markets.

www.chemring.co.uk

 

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