Chemring's shares took a hit on Tuesday, despite the British defence contractor's order book hitting a record £1.04bn in 2024, which secures over two-thirds of its revenue forecast for the next year.
The FTSE 250 company has reaffirmed its ambition to achieve £1bn in annual revenue by the end of the decade, buoyed by robust demand, as reported by .
"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," stated Michael Ord, Chief Executive.
He also noted that the outlook for global defence markets is "increasingly robust, with strong growth expected over the decade."
However, the company's shares dropped by more than seven percent in early trading due to concerns over "volatile" exchange rates throughout the year, as well as production issues and delays at its Tennessee Countermeasures business, impacting first-half performance.
Despite the downturn in share price, which has seen about a five percent decline year to date, the defence sector continues to benefit from significant military expenditure globally in the wake of Russia's invasion of Ukraine and renewed conflicts in the Middle East.
European Nato members are reportedly in discussions about increasing the alliance’s spending target to three per cent of GDP at its annual summit next June, according to a report in the Financial Times. Chemring’s order book, valued at £1.04bn, marked a 13 per cent year-on-year increase, while the Hampshire-based firm reported a three per cent rise in underlying operating profit to £71.1m.
Revenue also saw an eight per cent increase to £510.4m over the 12 months ending 31 October, and dividend payouts are expected to rise 13 per cent to 7.8p per share. Underlying pre-tax earnings (EBITDA) jumped six per cent to £93.7m.
