Chemring Group (LSE:CHG) on Thursday said full-year underlying operating profit is expected to come in at approximately £79m for the year ended 31 October, within the £77.2m to £81.8m analyst range but below the £80.3m consensus figure the London-listed defence and security group cited in Thursday's post-close trading update.
The group, which supplies countermeasures, energetics, sensors and information systems to defence, security and aerospace customers, closed the year with a record order book of £1.4bn, up from £1.3bn a year earlier. Net debt stood at approximately £145m at 31 October, better than consensus expectations of £174m, which Chemring attributed largely to the timing of capital expenditure.
Countermeasures & Energetics performed strongly through the year. Within Sensors & Information, Roke's order intake reached record levels, but Roke's overall FY26 performance fell below expectations because of delays to defence contract awards, principally from the UK Ministry of Defence and in international electronic warfare systems sales; Chemring said those delayed programmes remain active opportunities with customer engagement ongoing.
Restructuring at the Kilgore Flares US countermeasures business has continued since being outlined at the half-year results, with all legacy facilities now closed and operations concentrated in a fully automated facility; the Group flagged a likely non-cash impairment charge of approximately £50m and exceptional cash costs of around £3.5m tied to the restructuring and an inventory costing review.
"We delivered a solid performance in FY26 despite well-documented headwinds in parts of the UK market and we remain confident in delivering strong year-on-year growth in FY27, supported by our deliverable order book and a more balanced H1/H2 weighting," said Group Chief Executive Michael Ord.
The Board maintained its expectation of material earnings growth in FY27, with underlying operating profit expected to be more evenly weighted between the first and second half, reflecting scheduled programme deliveries. Chemring said energetics capacity expansion projects in Scotland and Norway, which it has been investing in through FY26, are expected to drive significant and sustained growth once they enter production in 2027 and 2028 respectively; these are separate from the proposed new military explosives facility under feasibility study in Norway, toward which the Norwegian Government's proposed 2027 State Budget includes an additional NOK186m (£15m) of support, taking total funding support to NOK390m (£31m) subject to approval.
The update also disclosed a run of contract wins across the Group's divisions. Chemring Energetics UK secured a seven-year sole-source UK MOD framework worth up to £100m for demolition stores and explosives, alongside an initial three-year, £23m production contract with deliveries starting in 2027, plus a £10m contract with Kongsberg Defence & Aerospace for Naval Strike Missile components; both will be delivered from Ardeer, Scotland, where the division ended FY26 with a record order book exceeding £150m.
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Chemring Countermeasures UK secured a sole-source UK MOD framework worth up to £120m, running from July 2026 to March 2031 with options for three one-year extensions, including an initial £9.4m production contract through to March 2030 delivered from its site near Salisbury.
Roke signed a five-year strategic partnering agreement with a major US prime contractor to supply its high-speed Miniature Radar Altimeter, expected to be worth at least $170m including an initial $16m production order for the first 12 months, with deliveries that commenced in October.
Separately, the Board has decided to initiate a sale process for Chemring Sensors and Electronic Systems, its US sensors business and sole-source supplier of biological warfare agent detectors to the US Department of Defense, concluding it would be better positioned under alternative ownership as part of a broader chemical, biological, radiological, nuclear and explosive detection portfolio that Chemring does not intend to build itself; CSES will now be classified as a held-for-sale asset and reported as a discontinued operation, with further detail on associated provisions to follow at full-year results on 8 December.
