Chemring Group PLC (LON:CHG) has announced its results for the year ended 31st October 2024.
As reported | At 2023 exchange rates | ||||
| 2024 | Change | 2024 | Change | 2023 | |
| Continuing operations | |||||
| Revenue (£m) | 510.4 | +8% | 517.3 | +9% | 472.6 |
| Underlying EBITDA* (£m) | 93.7 | +6% | 94.8 | +7% | 88.5 |
| Underlying operating profit* (£m) | 71.1 | +3% | 71.7 | +4% | 69.2 |
| Underlying profit before tax* (£m) | 66.3 | -2% | 67.0 | -1% | 67.9 |
| Underlying diluted earnings per share* (pence) | 19.3 | -4% | 19.5 | -3% | 20.0 |
| Statutory operating profit (£m) | 58.1 | +28% | 45.4 | ||
| Dividend per share (pence) | 7.8 | +13% | 6.9 | ||
| Net debt at 31 October (£m) | 52.8 | +267% | 53.2 | +269% | 14.4 |
| Order intake (£m) | 672.8 | -11% | 682.2 | -10% | 756.4 |
| Order book at 31 October (£m) | 1,037.8 | +13% | 1,072.5 | +16% | 921.6 |
Key achievements
Key achievements
· 2024 was in line with the Board’s initial expectations despite H1 headwinds
Ø Revenue growth of 8%, driven by strong performance at Roke, up 17%, and growth in our specialist energetic materials businesses, up 12%, offset by a weaker period for Countermeasures
Ø Underlying operating profit margin of 13.9% (2023: 14.6%) primarily reflecting the impact of operational challenges at our Tennessee countermeasures business in the period
Ø Improved cash conversion of 102% (2023: 90%) with continued focus on working capital
· A record order book of £1,038m, the highest in Chemring’s history, providing excellent medium-term revenue coverage
· Awarded c.£90m of grant funding to support capex investment to increase the capacity of our Norwegian site, amid unprecedented levels of demand for its products
· Investment in our Energetics capacity expansion plan increased from £120m to £200m, excluding grant funding
· Good progress made on capital projects to date, with c.£70m of capex spent in total during the period, and customers increasingly moving to long-term partnering agreements
· Net debt was £52.8m (2023: £14.4m), given c.£70m investment in capex and a further £28.1m on the share buyback. Net debt to underlying EBITDA of 0.56 times (2023: 0.16 times) below internal target of <1.5 times
· Proposed final dividend per share of 5.2p, up 13%, giving a total dividend of 7.8p (2.5 times cover)
· The Board’s expectations for the Group’s 2025 performance remains in line with market expectations, with a similar H2 weighting. Approximately 77% (2023: 79%) of expected 2025 revenue is already covered by the order book, with unprecedented cover in Countermeasures & Energetics for 2026 and 2027 at 81% and 52% respectively
Michael Ord, Group Chief Executive, commented:
“2024 was another year of positive performance for Chemring as we continued to see heightened activity and progress across the Group amidst growing demand for our products and services. Our teams delivered on expectations despite the operational headwinds that we experienced in the first half of the year. Changing customer spending priorities in the face of increased global uncertainty and competition have resulted in the order book being at its highest level in Chemring’s history, giving us a strong and sustainable platform for future growth.
The outlook for global defence markets is increasingly robust, with strong growth expected over the next decade. This growing visibility gives us the confidence to continue to invest for the future, balancing near-term performance with longer-term growth and value creation. Chemring is well placed to deliver on its many opportunities and we maintain our ambition to increase the Group’s annual revenue to c.£1bn by 2030.”
Notes:
* All profit and earnings per share figures in this news release relate to underlying business performance (as defined below) from continuing operations unless otherwise stated.
The principal alternative performance measures (“APMs”) presented are the underlying measures of earnings which exclude: exceptional items, gain or loss on the movement on the fair value of derivative financial instruments, the amortisation of acquired intangibles and the associated tax impact on these items. The Directors believe that these APMs assist with the comparability of information between reporting periods as well as reflect the key performance indicators used within the business to measure performance. The term underlying is not defined under IFRS and may not be comparable with similarly titled measures used by other companies.
A reconciliation of underlying measures to statutory measures is provided below:
| Group – continuing operations: | Underlying | Non-underlying | Statutory |
| EBITDA (£m) | 93.7 | (11.0) | 82.7 |
| Operating profit (£m) | 71.1 | (13.0) | 58.1 |
| Profit before tax (£m) | 66.3 | (13.0) | 53.3 |
| Tax charge (£m) | (12.3) | 1.7 | (10.6) |
| Profit after tax (£m) | 54.0 | (11.3) | 42.7 |
| Basic earnings per share (pence) | 19.8 | (4.1) | 15.7 |
| Diluted earnings per share (pence) | 19.3 | (4.0) | 15.3 |
| Group – discontinued operations: | |||
| Loss after tax (£m) | (1.3) | (1.9) | (3.2) |
| Segments – continuing operations: | |||
| Sensors & Information EBITDA (£m) | 47.3 | (3.2) | 44.1 |
| Sensors & Information operating profit (£m) | 41.4 | (4.0) | 37.4 |
| Countermeasures & Energetics EBITDA (£m) | 63.2 | 2.8 | 66.0 |
| Countermeasures & Energetics operating profit (£m) | 46.5 | 1.6 | 48.1 |
The adjustments comprise:
· amortisation of acquired intangibles of £2.0m (2023: £3.0m)
· costs relating to acquisitions, including deferred consideration treated as an expense under IFRS 2, of £3.4m (2023: £3.7m)
· costs relating to the defined benefit pension buy-in and buy-out transaction £7.5m (2023: £nil)
· costs relating to changes in senior management positions £1.2m (2023: £nil)
· impairment of Chemical Detection assets £nil (2023: £18.5m)
· release of legal and disposal provisions £3.1m (2023: £3.2m charge)
· loss on the movement in the fair value of derivative financial instruments of £2.0m (2023: £1.4m gain)
· tax impact of the adjustments above: £1.7m credit (2023: £3.8m credit)
· discontinued operations in respect of the Explosive Hazard Detection (“EHD”) business in Sensors & Information, net of tax, credit of £4.5m (2023: £31.4m charge) which includes an impairment of goodwill and other assets; and
· an increase in disposal provision relating to a discontinued operation of £6.4m (2023: £nil).
Further details are provided in note 3.
EBITDA is defined as profit before interest, tax, depreciation and amortisation. Reference to constant currency relates to the re-translation of 2024 financial information at the 2023 exchange rates to reflect the movement excluding the impact of foreign exchange. The exchange rates applied are disclosed in note 11.
Analyst meeting
An analyst meeting will take place at 09.00 (UK time) on Tuesday 17 December 2024 at the offices of Investec Bank plc, 30 Gresham St, London EC2V 7QP. To confirm attendance please contact MHP: [email protected] / 07817 458804
Presentation
The presentation slides and a live audio webcast of the presentation to analysts will be available at the Chemring Group results centre www.chemring.com/investors/results-centre at 09.00 (UK time) on Tuesday 17 December 2024.
