Chemring confirms annual guidance as profit jumps in the first half on new US orders

Chemring Group (LON: CHG) said on Wednesday that its profit came in stronger than expected in the first half (H1) despite the Coronavirus challenges. The company attributed its success to new orders that it received from the U.S. Chemring also expressed confidence that the company will hit its annual targets for the current financial year.

The British defence contractor boasted a strong order book as it announced its underlying pre-tax profit to have climbed to £24.2 million in the six months that ended on 30^th April as compared to £9.9 million in H1 last year. In its statement on Wednesday, Chemring said:

“H1 performance was ahead of our expectations reflecting strong performance in both segments and some positive timing difference.”

Chemring reports a 1% increase in order intake

Shares of the company were reported more than 15% up in premarket trading on Wednesday. At 270 pence per share, Chemring is a little under 10% down year to date in the stock market after recovering from a low of 167 pence per share in March. Learn more about how to choose winning stocks.

In its report on Wednesday, Chemring revealed a 1% increase in its order intake to £250 million in H1. Its order book now values £504 million.

The Romsey-headquartered firm also accentuated that the United States has placed additional orders (IDIQ) for the Husky Mounted Detection System (HMDS) worth £25.44 million. Chemring also announced last month that it had secured a contract from the US Navy worth about £79.50 million over the next five to ten years.

Chemring remains operational amidst COVID-19 restrictions

The London-listed company currently has a workforce of 2,500 employees. All of Chemring’s businesses remained opened amidst COVID-19 that has so far infected more than 275,000 people in the United Kingdom and caused over 39,000 deaths.

As of the end of April, the UK company minimised its debt pile to £60.6 million that translates to a 30% reduction and revealed an 8% increase in its interim dividend to 1.3 pence a share.

Chemring’s performance in the stock market was reported largely upbeat in 2019 with an annual gain of about 50%. The stock has recovered roughly 65% in the past three months. At the time of writing, the British defence contractor has a market capitalisation of £758.97 million and a price to earnings ratio of 33.35.