Chemring Group PLC has released a trading update for the period up to August 31, 2023. The company reported strong order intake and stated that its expected revenue for the fiscal year 2023 is fully covered by the order book. However, the achievement of full-year expectations is subject to US Department of Defense approval of certain countermeasure deliveries worth approximately £25 million. The approval is expected to be granted pending the determination of the quality of raw materials provided by a third-party supplier. The company is working to resolve this matter.
Chemring Group has received several significant orders during the period. In the Sensors & Information sector, its specialist consulting and technology business, Roke, has been awarded a contract valued at £40 million to deliver the next two years of Project ZODIAC for the UK Ministry of Defence. This project aims to provide an integrated intelligence, surveillance, target acquisition, and reconnaissance system for the British Army. Roke will act as the Prime Systems Integrator, and deliveries under this contract are expected to begin in late FY23.
The company's US Sensors business has received approval for the Joint Biological Tactical Detection System program, with a Low Rate Initial Production contract valued at $15 million. Hardware deliveries under this contract will be made over the next 10 to 14 months.
In the Countermeasures & Energetics sector, Chemring Nobel, the company's Norwegian business, is working with customers such as Northrop Grumman, Diehl Defence, Rheinmetall, and Nammo to establish long-term supply agreements. Chemring Nobel now has a record order book. In the US, the Chicago business has received multiple orders, including contracts to supply critical components to Lockheed Martin and key parts for the United Launch Alliance Vulcan launch system. The Chicago business also has a record order book exceeding $100 million.
Overall, Chemring Group's three niche Energetics businesses have seen strong customer demand, with order intake up 122% compared to the previous year. The Countermeasures businesses have also received significant orders, maintaining the company's position as a world leader in advanced expendable countermeasures.
The company expects to achieve another record year in FY23 for its specialist consulting and technology business, Roke, with revenue exceeding £160 million. The order cover for FY24 is building, with Countermeasures & Energetics having 81% order cover and the Sensors & Information sector having 54% cover.
Chemring Group has not provided a specific date for its full-year results announcement.