TIDMCHG
RNS Number : 9111E
Chemring Group PLC
04 March 2020
FOR IMMEDIATE RELEASE 4 MARCH 2020
CHEMRING GROUP PLC ("Chemring", the "Group" or the
"Company")
AGM - Trading Update
Chemring issues the following update on current trading and
outlook for the year, to coincide with the Company's Annual General
Meeting taking place later today.
Outlook and current trading
The Board's expectations for the current year are unchanged.
The Group continues to make good progress in the execution of
its strategy and is well placed to take advantage of the growth
opportunities that are available. Current trading has been in line
with our expectations in both segments.
In Sensors & Information, Roke continues to see growing
demand for its services and the US Programs of Record continue to
progress in line with our expectations.
In Countermeasures & Energetics, our Australian facility has
successfully delivered its first batches of training
countermeasures for the F-35 program to the US DoD and has
commenced production of the first batch of operational
countermeasures. Our UK facility continues to ramp up output
following the phased restart in 2019 and is now focused on
operational efficiency. In the US, our focus has been on our
capital investment programme in Tennessee which, when commissioned
in H2/FY21, will provide additional automated capacity for the
manufacture of F-35 countermeasures.
The Covid-19 outbreak is not currently having any material
impact on our businesses or their supply chains. However, we are
monitoring the situation closely.
Markets
The backdrop of continued geopolitical unrest supports the need
for government spending on defence and national security in all our
target markets.
In the key US market, current defence spending, future 2021
budget and longer-term projections to 2025 remain at high levels
(see note 1). The 2020 Defence budget may lead to the US DoD
procuring additional F-35 Joint Strike Fighters, which should be a
medium term positive for the Group's supply of countermeasures to
the F-35 program.
Orders
Continuing order intake in the period to 29 February 2020 was
GBP132m (2019: GBP120m), with a book to bill ratio of 125% (2019:
154%). Expected FY20 revenue is now 88% (2019: 86%) covered by
period to date revenue and the order book, split 92% (2019: 93%) in
Countermeasures & Energetics and 80% (2019: 72%) in Sensors
& Information. The order book for continuing operations stood
at GBP478m at 29 February 2020 (2019: GBP421m).
In line with our strategic priority of securing longer term high
quality customer relationships and orders, during the period the
Group secured a number of notable order wins:
After two years of extensive trials Chemring has secured its
first order to supply its Resolve electronic warfare product into
the US market. Establishing a foothold in the electronic warfare
market in the US was a key strategic objective for the Sensors
& Information sector in FY20. Further orders are anticipated as
the equipment is deployed.
The US Sensors & Information business received a further
delivery order of $32m under the 3 year HMDS IDIQ contract which
provides visibility on this Program of Record well into FY21.
Chemring Countermeasures USA was awarded four contracts
totalling $50m to supply expendable countermeasures to
the US Air Force and US Navy. Deliveries under these contracts will be made in FY20 and FY21.
Under the $60m Undefinitised Contract Action ("UCA") for F-35
countermeasures announced on 10 May 2019, Chemring Australia has
agreed a definitisation of this contact at a total value of $98.5m.
Deliveries are expected to be fulfilled in FY20 and FY21.
Chemring Energetic Devices, Inc. has been awarded a $24m, 7 year
indefinite-delivery/indefinite-quantity contract for supply of
various Cartridge Actuated Devices/Propellant Actuated Devices for
various U.S. and Foreign Military Sales ("FMS") aircraft. An
initial delivery order of $5.6m has been received against this
contract.
Chemring Countermeasures UK and Chemring Energetics UK both
signed long term framework contract agreements with the UK MOD
covering the next five years, with a further two year option.
Initial delivery orders under these frameworks are expected later
this year.
Net debt
Net debt at 29 February 2020 was GBP85.9m (28 February 2019:
GBP84.4m; 31 October 2019: GBP75.7m). The 29 February 2020 net debt
level reflects the initial recognition of a GBP6.5m finance lease
liability as a result of applying IFRS 16 Leases (effective 1
November 2019), and the previously announced high level of capital
expenditure in 2020 which has been funded by continued strong
operating cash generation.
Interim results date
The Group will report its interim results for the six months
ended 30 April 2020 on 3 June 2020.
- ENDS -
For further information:
Rupert Pittman Group Director of Corporate Affairs, Chemring Group PLC +44 (0)1794 833901
Andrew Jaques
Oliver Hughes MHP Communications +44 (0)20 3128 8100
Cautionary statement
This announcement contains unaudited information based on
management accounts and 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
1. In the key US market, the 2020 Defence budget was approved by
the President, comprising $633bn base budget and $71bn war funding
(2019: $616bn base budget and $69bn war funding). The "plus up" on
the F-35 joint Strike Fighter program may lead to the US DoD
procuring additional aircraft, a medium term positive for the
Group's supply of countermeasures to the F-35 program. President
Trump has requested $636bn and $69bn for 2021, in line with a
two-year budget deal struck by Congress and the White House last
year. This, combined with the top-line projections for the Future
Years Defense Program ("FYDP") to FY25, gives the Group confidence
in its core US market.
2. 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 2,500 people worldwide, and with
production facilities in four countries, Chemring meets the needs
of customers in more than fifty countries
-- Chemring is organised under two strategic product segments:
Countermeasures & Energetics, and Sensors & Information
-- 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, Chemring has the agility to rapidly react
to urgent customer needs
www.chemring.co.uk
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London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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