TIDMCHG
RNS Number : 5877M
Chemring Group PLC
28 August 2013
FOR IMMEDIATE RELEASE 28 AUGUST 2013
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 2013 to
date, as required by Rule 4.3 of the Disclosure and Transparency
Rules of the UK Listing Authority.
Current trading
Revenue from continuing operations for the three month period to
the end of July 2013 was GBP142.8 million, compared with GBP165.1
million in the same period last year. This revenue decline was
anticipated and the Board's current outlook for the full year
remains in line with market expectations.
Revenue levels reflect the ongoing deterioration in defence
spending within our NATO markets and delays in order placement by
customers in each of our geographic markets. Indications from the
US Department of Defense ("the DoD") are that all product orders
will be delayed as a result of sequestration, continuing resolution
and budget management.
The Group's order book at 31 July 2013 was GBP747.8 million,
6.7% higher than the GBP701.1 million order book at 30 April 2013,
but lower than the GBP909.9 million order book at 31 July 2012.
24.7% of the order book at the end of July 2013 was for delivery in
the current financial year.
Countermeasures
Revenue at our Countermeasures business was 32.2% below the same
period last year. This was primarily due to the lower opening order
book but was also due to DoD delays to product acceptance, order
funding and awards. Consequently, order intake fell 30.8% compared
to the same period last year.
In our Interim Results announcement in June 2013, we referred to
a significant countermeasures order from a Middle East customer,
for delivery in the second half of this financial year. Whilst this
order has not yet been confirmed, it is currently expected to be
received and delivered before the end of the financial year.
Sensors & Electronics
Revenue from the Sensors & Electronics segment was 6.0%
lower than for the same period last year, primarily due to the
phasing of activity under the US$579 million Husky Mounted
Detection System ("HMDS") Indefinite-Delivery/Indefinite-Quantity
("IDIQ") contract, together with other major contracts. A strong
order intake in the period included a further delivery order
(US$76.7 million) to provide spares under the HMDS IDIQ contract.
The period of performance for this delivery order is through to May
2014. An order for HMDS was also received from Turkey, and the
system continues to generate interest in our NATO markets. In
addition, we received an order from the US Army for Joint
Biological Point Detection Systems and associated spare parts and
services (US$25.2 million).
Pyrotechnics & Munitions
Revenue in our Pyrotechnics & Munitions segment decreased by
7.6% compared with the same period last year, reflecting delays in
export licence approvals and slower than expected placement of
orders.
Order intake in the quarter was mixed, with land ammunition
contract delays offset by orders for naval ammunition from
customers in the Middle and Far East.
Energetic Sub-Systems
Revenue in our Energetic Sub-Systems segment was 18.7% lower
than the same period last year, reflecting a significant decline in
sales of build-to-print fuze components and cartridges, and delays
in the production of components for the PAC-3 missile
programme.
Order intake in the period rose by 16.1% compared to the same
period last year, driven by strong demand for aircraft safety and
satellite sub-systems.
Performance Recovery Programme
The Performance Recovery Programme set out by the new management
team in January 2013 is progressing well, with improvements in
operational efficiency and responsiveness starting to come through.
Our customers are beginning to see the benefits of a more
co-ordinated approach to product integration and technology
development.
We have begun a comprehensive planning and budgeting process
covering the next three years, which will give us a better
understanding of the markets in which we operate and where
development spend needs to be focused. This review is comprehensive
and covers all aspects of the business, and will ultimately lead to
a set of strategic objectives that will set out our longer term
aspirations for the business.
Financial position
The Group's net debt at the end of July 2013 was GBP295.2
million (31 July 2012: GBP315.2 million).
Outlook
Governments' budget uncertainties and a lack of visibility will
continue to impact confidence in the Group's markets, as order
placement decisions are delayed. However, the quality of Chemring's
operations is improving as a result of the Performance Recovery
Programme, and we remain focused on driving further enhancements in
operational performance and restructuring the business to provide
greater resilience.
As previously highlighted, we have begun a comprehensive
planning process that will detail our business strategy and market
forecasts for the next three years, and this will feed directly
into a detailed budgeting exercise for our next financial year.
This will give greater clarity on the future direction of the
business, and significantly improve our understanding of prospects
within our end markets. The findings of this process will be
communicated in due course.
The Board's current outlook for this financial year, absent any
material change in customer behaviour, remains in line with market
expectations.
-ENDS-
The next scheduled announcement from Chemring will be a
post-close trading update, expected to be issued in November
2013.
For further information:
Mark Papworth Group Chief Executive, Chemring Group PLC 01489 881880
Steve Bowers Group Finance Director, Chemring Group PLC 01489 881880
Rupert Pittman Group Director of Communications and
Investor Relations, Chemring Group PLC 01489 881880
Andrew Jaques MHP Communications 0203 128 8100
John Olsen
James White
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 sixty countries worldwide.
-- The Company has a diverse portfolio of products protecting
military people and platforms against a constantly changing
threat.
-- Operating in niche markets with short product development
timescales, Chemring has the agility to rapidly react to urgent
customer needs.
-- Strong R&D investment for new products and improvements
in technology continually allows Chemring to expand its addressable
markets.
www.chemring.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Chemring (LSE:CHG)
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