Chemring Group PLC AGM Trading Update (5080T)

TIDMCHG

RNS Number : 5080T

Chemring Group PLC

21 March 2019

21 March 2019

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. The Company is also hosting an update presentation tomorrow, which will cover Chief Executive Michael Ord's initial observations on the Group.

Outlook

The Board's full year expectations are unchanged, however as a result of operational disruption at some of the manufacturing sites the Group now expects a more significant second-half weighting to revenue, underlying operating profit (15%:85%) and cash. While there are a number of variables including increased operational execution risk, Brexit and associated international trade licensing, exchange rates and insurance recoveries in respect of the UK Countermeasures incident which occurred last August, expected deliveries in the second half are well covered by the Group's current order book. Further updates will be provided as we progress throughout the year.

Countermeasures & Energetics sector

The financial performance of the sector in the first half is expected to be adversely affected by both planned and unplanned operational disruption at some sites.

The phased restart programme for the UK Countermeasures site remains on track with chaff and naval decoy lines now operational. Returning spectral and MTV lines to operation in the third quarter is progressing as planned, with the overall site scheduled to be at steady state manufacturing by the end of the current financial year.

As planned the Australian site has been off-line to enable the change-over to F-35 Lightning II countermeasures manufacturing. The Tennessee and Norwegian sites both experienced the failure of manufacturing equipment, the causes of which have been fully investigated and necessary rectification has taken place. Both sites are now operational and plans to recover lost production are in place for the remainder of the year.

The order book provides excellent short-term revenue coverage for the current financial year and the multi-year nature of some contracts provides good medium-term visibility.

Sensors & Information sector

Progress continues to plan on the long-term US DoD Programs of Record with the Group maintaining its position in the explosive hazard detection, chemical detection and biological detection major programs. During the period the Group was awarded a further delivery order for the next phase of the HMDS IDIQ, valued at $25m, and a $9m order for the second phase of Engineering and Manufacturing Development (EMD) for the Enhanced Maritime Biological Detector (EMBD) program. The Group also delivered six base EMD units to the customer for the Aerosol and Vapour Chemical Agent Detector (AVCAD) program. The Roke business continues to develop across its national security, defence and commercial activities, with robust market conditions across all.

The order book, which by the nature of the segment is shorter cycle, provides good visibility of current year revenue.

Update presentation

The Group is hosting an analyst and institutional investor presentation tomorrow, 22 March 2019, at which CEO Michael Ord will outline his initial observations on, and some medium-term plans for, the Group. The presentation will be webcast and a copy will be made available on the Group's website www.chemring.co.uk

Interim results date

The Group will report its interim results for the six months ended 30 April 2019 on 5 June 2019.

- ENDS -

For further information:

 
Rupert Pittman   Group Director of Corporate Affairs, Chemring Group PLC   [phone] 
Andrew Jaques    MHP Communications                                        [phone] 
 

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

-- 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 now 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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March 21, 2019 03:00 ET (07:00 GMT)