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.
