18 MAR 09. Chemring Group PLC issued its Interim Management Statement covering the period from 1 November 2008 to date, as required by Rule 4.3 of the Disclosure and Transparency Rules of the UK Listing Authority.
Trading in both the Energetics and Countermeasures divisions for the four month period to the end of February 2009 continued to be strong, with Group revenues and operating profits in excess of 50% higher than for the same period in 2008. This increase in revenue includes 21% growth from acquisitions made in the last twelve months and confirms the strong levels of organic growth reported in the last full year results. The
Group’s order book currently stands at £558m, which is 39% higher than at this time last year. The Board is confident that the outlook for 2009 remains in line with its expectations.
The Energetics division continues to expand rapidly and contributed 60% to Group revenue in the four month period to the end of February 2009. Simmel had an excellent start to the year, with higher than expected sales of 81mm illumination mortar rounds to BAE Systems plc and 120mm tank ammunition to another NATO country. With high levels of order intake and many emerging opportunities, it is expected that Simmel will continue to perform strongly during the rest of 2009. Demand for the Group’s signal, screening and illumination products continues to grow across a wide range of customers. Trading at Chemring Defence is significantly ahead of the previous year with strong demand from the UK Ministry of Defence and our NATO allies. Demand is also growing for disrupter and remote initiation systems from Chemring EOD, which has recently secured several important orders from the US Army for disarming IEDs or road-side bombs from stand-off distances. The US Army has recently announced the award of two major contracts to the Group’s newly-acquired business, NIITEK, with a total value of $51m, for the supply and support of thirty Husky Mine Detection Systems (HMDS) for high reliability route clearance of buried mines in support of US peacekeeping operations around the world. The first three systems have been delivered to the customer and will be deployed shortly.
The Countermeasures division has performed well with our UK countermeasures business continuing to operate at very high levels of production. Demand for flares for the Typhoon aircraft continues to grow and we have just secured our first major export production contract. Chemring Countermeasures plans to invest £18.5m over the next eighteen months in the construction of a new world-class manufacturing facility in Salisbury, and initial work on the building foundations has now started. During the period, Alloy Surfaces was awarded a five year IDIQ (Indefinite Delivery, Indefinite Quantity) contract from the US Air Force for the MJU-51 special material decoys, which are used for the covert protection of transport aircraft. The first two contract awards were for $27m for delivery in 2009. More recently, Alloy Surfaces has received the second year option, worth $11m, for the supply of M211 special material decoys, which are used to protect US Army helicopters from the latest infra-red guided missiles. Further long-term contracts from both the US Air Force and the US Navy are still under negotiation and are expected to be implemented over the next six months.
Kilgore Flares also continues to grow strongly, although its performance has been constrained by continuing delays in the placement of contracts by the US Air Force. A $23m contract for the supply of M206 and MJU-7 decoys for the protection of F-16 and A-10 combat aircraft was recently awarded, and additional contracts for the F-22 flares suite and the C-17 transport aircraft are expected shortly.
In November 2008, Chemring Australia was awarded a long-term contract for the supply of countermeasures and pyrotechnics to the Commonwealth of Austr