TIDMCHG
RNS Number : 8170K
Chemring Group PLC
28 August 2012
FOR IMMEDIATE RELEASE 28 AUGUST 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 May 2012 to
date, as required by Rule 4.3 of the Disclosure and Transparency
Rules of the UK Listing Authority.
Current Trading
Trading for the three month period to the end of July 2012 saw
steady growth, with revenue in the period up 4% to GBP165 million
from GBP158 million in the same period last year. Revenue from
continuing operations in the nine month period to the end of July
2012 was, therefore, GBP498 million, 4% higher than in the same
period last year. However, we have recently discovered errors
within a new Enterprise Resource Planning (ERP) system being
installed at our subsidiary in Florida. In addition, we have been
informed of several months of delay in the start of production of
the MK7 MOD 2 Anti-Personnel Obstacle Breaching System ("APOBS").
Largely as a result of these developments, we have reduced our
current expectations for full year operating profit by
approximately GBP15 million, equivalent to about 6 pence of
earnings per share.
The Group's order book at the end of July was GBP910 million,
which is 9% lower than at this time last year. This reflects a
lower than expected order intake in the period, with orders delayed
by the growing length of the export license approval cycle in many
European countries and the impact of the early start to Ramadan on
Middle East customers. The outlook for the US defence market
continues to be uncertain with the majority of our customers
indicating that they have no visibility of funding in the next
financial year until the funding for the FY2013 defence budget is
eventually resolved.
Counter-IED
Our counter-IED business continues to grow rapidly, with revenue
119% higher than for the same period last year, more than
recovering the shortfall at the half year. NIITEK made a strong
contribution, with high levels of activity on the new Husky Mounted
Detection System ("HMDS") ground penetrating radar IDIQ contract.
Revenue in the period was 92% higher than in 2011. A strong
performance from Chemring Detection Systems was also evident with
the increased rates of production of both our chemical and
biological detection systems for the US customer. However,
production of APOBS at Chemring Ordnance, which was expected to
start in July, will not now start until the first quarter of the
next financial year. This delay has been caused by the extended
work still needed to achieve site safety approval for a
government-directed supplier that provides a key component for the
system. Despite this delay, a further award of $40.4 million of
production has just been received, taking the total orders to date
on this contract to over $114 million.
Countermeasures
Our countermeasures business contracted over the period, with
revenue decreasing 11% compared to 2011, and year-to-date revenue
is now similar to the previous year. Our US businesses delivered
30% lower revenues than last year, reflecting the falling demand
from the US Government for flares to protect helicopter and
transport aircraft and the delays in order placement. Furthermore,
continued delay by the regulatory authorities in approval of the
new MJU-7 production facility has constrained some production at
Kilgore. However, the new production facility in Australia started
operation successfully, and has satisfactorily increased production
to its expected capacity. Roke has also delivered an excellent
performance, with revenue 67% higher than in the same period driven
by sustained demand for both its products and engineering
services.
Munitions
Trading at our munitions business was rather slow during the
period with revenues of GBP39 million, down 45% on the same period
in 2011, although year-to-date revenues are still 9% ahead of last
year. The majority of the difference was at Mecar, where delays in
order intake from slow export license approvals reduced revenues in
the period, and where we had an unusually high revenue in the same
period last year following resumption of production following the
incident in September 2010. Simmel, however, performed well with
revenue up 168%, driven by increased production levels of 76mm
naval rounds.
Pyrotechnics
Our pyrotechnic business recovered from its subdued first half
performance, generating revenues 38% higher than for the same
period last year. Year-to-date revenues are broadly in line with
2011. This recovery was led by a 49% increase in revenues from
sales of 81mm and 120mm smoke and illuminating mortar rounds to
both our European and Middle East customers. Good growth was also
achieved in our smoke and signal grenades for export customers, as
well as our 40mm pyrotechnic rounds to the US Army.
Disposal
On 31 July 2012, the Group successfully completed the sale of
its marine interests to Drew Marine for GBP32 million, having
received all necessary regulatory approvals.
Current Financial Position
Net debt at 31 July 2012 was GBP315 million (31 July 2011:
GBP305 million).
There has been a net outflow of cash since the half year,
despite the inflow from the sale of our marine interests.
Significant operating cash inflow is expected in the last three
months of the financial year.
Approach from Carlyle
As announced on 17 August 2012, the Group has received an
approach from the Carlyle Group.
For further information:
Rupert Pittman Director of Communications & Investor Relations 01489 881880
Emma Crawshaw 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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