Chemring Group (LSE:CHG) has signed two agreements with the US Department of War worth a combined $345 million that will resume sustained manufacturing at its Alloy Surfaces Company unit, reversing a strategic review launched just seven months ago.
The larger award is a modification to an Indefinite Delivery, Indefinite Quantity (IDIQ) contract, funded under the Defense Production Act, with a maximum value of $300 million over five years and guaranteed minimum annual payments of $35 million for the first three years.
The second agreement, structured as an Other Transaction Authority (OTA), delivers $45 million of Industrial Base Analysis and Sustainment programme funds to finance the manufacturing restart and the transfer of intellectual property rights in ASC's pyrophoric decoys to the DoW, with a modest upfront payment and the remainder spread over five years.
Deliveries under the IDIQ are expected to begin in the first quarter of FY28, with the decoys supporting aviation survivability across the US Army, Air Force, Navy, Special Operations Command and allied nations through Foreign Military Sales.
Chemring had classified ASC as a discontinued operation in its FY25 accounts after insufficient order intake threatened the unit's viability; for FY26 reporting it will be reclassified as a continuing operation.
No impact on FY26 or FY27 earnings is expected, with updated financial guidance to follow at the year end.
"This award builds on our already strong order cover across Countermeasures and Energetics and reflects our customer's trust and confidence in the vital role Chemring plays in NATO's defence industrial base," said chief executive Michael Ord.
