Chemring says its revenue climbed by 20% in fiscal 2020

Chemring Group plc (LON: CHG) said on Tuesday that its financial performance in the year that concluded on 31^st October was better than expected. The company slashed its net debt and raised its dividend on Tuesday. CEO Michael Ord commented on the financial update and said:

“Trading since the start of the current financial year has been in line with expectations. With 78% of 2021 expected revenue covered by the order book, the board’s expectations for 2021 performance remain unchanged.”

Chemring reports £51.7 million of underlying pre-tax profit

Chemring said that its full-year revenue came in at £402.5 million that represents a 20% annualised growth. The aerospace and defence company attributed the increase in annual revenue primarily to its Countermeasures & Energetics arm.

In comparison, the London-listed company had revealed a 30% decline in its revenue to £77.5 million in the fiscal third quarter, as per the report published in September.

Chemring jumped roughly 6.5% in premarket trading on Tuesday and gained another 6.5% on market open to hit a 7-year high in the stock market. At 300 pence per share, it is now more than 20% up year to date in the stock market after recovering from a low of 168 pence per share in March due to the COVID-19 crisis that has so far infected more than 73 million people worldwide and caused over 1.6 million deaths.

According to the Romsey-based company, its underlying pre-tax profit stood at £51.7 million in the recent fiscal year that translates to a 31% year over year increase. At £48.2 million, its net debt was over 33% lower than last year – thanks to strong operational cash generation.

Chemring declares 3.9 pence per share of dividend on Tuesday

The board announced 3.9 pence per share of dividend on Tuesday, or 8% higher than last year. According to Peel Hunt analysts:

“Management has made a lot of headway tidying the business up over the last couple of years – for example, we note this is the second year running with no exceptional charges and operating cash conversion (of EBITDA) above 100%.”

Chemring performed largely upbeat in the stock market last year with an annual gain of more than 50%. At the time of writing, the British company that has extensive operations in Asia, Middle East, Europe, and Americas, is valued at £846.55 million and has a price to earnings ratio of 22.70.