TIDMCHG
RNS Number : 6402Z
Chemring Group PLC
04 September 2018
FOR IMMEDIATE RELEASE 4 SEPTEMBER 2018
CHEMRING GROUP PLC
TRADING UPDATE
Chemring Group PLC ("Chemring" or "the Group") today issues an
update on trading for the four month period from 1 May to 31 August
2018.
Update on CCM Incident
Following the incident on 10 August at our CCM facility in
Salisbury, our injured colleague remains in hospital recovering
from his injuries. The Group is committed to supporting him and his
family throughout his recovery, along with the family of our
colleague who tragically lost his life in the incident.
The investigation into the incident, which occurred in an MTV
flare mixing building at the Group's Salisbury site in the UK, is
ongoing and the Group is working closely with the regulatory bodies
to determine the root cause.
We are also working with the regulatory bodies on the UK CCM
site restart plan. The initial steps of this plan will be to
complete the shipment of finished goods inventory and initiate a
phased restart of non-MTV product lines. The impact on the Group's
underlying operating profit in the current financial year is likely
to be around the middle of the range of GBP10m - GBP20m indicated
in the statement made on 13 August.
The Group is still assessing the impact on the 2019 financial
year which will be dependent on the site restart plan, as agreed
with the regulatory bodies, and expected production rates. The
Group is accelerating the transition to more automated MTV
production facilities, which will improve operational
effectiveness.
The Group has engaged with its insurers, but at this stage it is
too early to assess the amount of any claim or the likely timing of
any payments. The Group's property damage and business interruption
insurance policy has a deductible of GBP2.5m, an overall policy
limit of GBP60m and a twelve-month indemnity period for business
interruption claims.
Countermeasures
The period has seen positive customer demand, resulting in
GBP78m of orders received. The majority of orders were from the US
Government for a range of requirements including spectral, infrared
and special material decoys, which are manufactured at the Group's
US CCM facilities. This provides strong order book coverage for our
2019 financial year.
Sensors
In Sensors, the Group is pleased to announce that it has
received a number of significant awards in the period.
In the counter-IED market, Chemring Sensors and Electronic
Systems (CSES) has been awarded a $93m, three-year IDIQ to
refurbish and refresh the US DOD's fleet of Husky Mounted Detection
Systems (HMDS). The initial award under this IDIQ contract is for
$20m for delivery in the first year of the contract. CSES has also
been awarded a $14m incrementally funded Research and Development
contract for the HMDS.
In the biological detection market, CSES has also been awarded
an IDIQ contract for the Enhanced Maritime Biological Detection
(EMBD) program. The scope of work under this Delivery Order
includes Engineering, Manufacturing, and Development (EMD) with
options for Low Rate Initial Production (LRIP). The total contract
value, including options, is $24m with the initial award under this
IDIQ contract being $13.6m, with an initial delivery order of
$5m.
In the chemical detection market, CSES has been notified that it
was not one of the selected bidders to move to the next stage of
the third stream of the Next Generation Chemical Detector (NGCD3)
now known as the Multi Phase Chemical Agent Detector (MPCAD). An
award decision on the first, and largest, stream of the NGCD
program, the Aerosol & Vapor Chemical Agent Detector (AVCAD),
is expected shortly.
In the UK, Roke was part of the consortium awarded the contract
to provide private sector support to the UK MOD's procurement team
in the delivery of the Battlefield Tactical Communication and
Information System (BATCIS), the next generation land tactical
communications and information system.
Energetics
As expected, in the commoditised pyrotechnic and ammunition
market, demand continues to soften. The Group continues to focus on
its move away from short-term commodity products to longer-term
contracting and partnering agreements in higher margin niche
product areas, where the demand for specialist devices and high
explosives continues to be robust.
Outlook
Recent contract awards in our Countermeasures and Sensors
segments demonstrate both continued customer demand and the
progress the Group is making on its roadmap to focus on higher
margin, niche market positions where the Group is best placed to
generate future value.
With the exception of the impact of the CCM incident, trading
across the Group remains in line with the Board's expectations.
-ENDS-
For further information:
Rupert Pittman Group Director of Corporate Affairs, 01794 833901
Chemring Group PLC
Andrew Jaques MHP Communications 0203 128 8100
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 global business that specialises in the
manufacture of high technology products and the provision of
services to the aerospace, defence and security markets
-- Employing approximately 2,600 people worldwide, and with
production facilities in four countries, Chemring meets the needs
of customers in more than fifty countries
-- Chemring is organised under three strategic product segments:
Countermeasures, Sensors, and Energetics
-- Chemring has a diverse portfolio of products that deliver
high reliability solutions to protect people, platforms, missions
and information against constantly changing threats
-- Operating in niche markets and with strong investment in
research and development ("R&D"), Chemring has the agility to
rapidly react to urgent customer needs
www.chemring.co.uk
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END
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September 04, 2018 02:00 ET (06:00 GMT)
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