Yahoo Finance West embarks on ‘decade of rearmament’ as defence orders boom
British defence contractor Chemring has racked up the biggest order book in its history amid predictions that Western tensions with Russia and China will result in a decade of rearmament.
The FTSE 250 company, based in Hampshire, revealed on Tuesday that its pipeline of work had grown to more than £1bn in value.
That is up from £922m as recently as October and £500m in 2021.
Chemring supplies so-called countermeasures for aircraft, such as flares, decoys and “chaff”, small pieces of metal or glass fibre dispersed to confuse radar and incoming missiles.
The devices are used by the Royal Air Force’s Typhoon fighters and F-35 stealth jets, as well as by a string of aircraft operated by the US and other Nato countries.
Its sensors and information division also provide electronic warfare software used to jam communications, and devices for detecting chemical and biological hazards.
With the war in Ukraine having spurred a wave of rearmament across the West, the company’s order book is benefiting from the large number of US-made F-35 jets being bought by allies including Britain, Australia and Germany.
Michael Ord, the company’s chief executive, said on Tuesday: “The momentum seen in 2023 has continued with another period of record order intake and an order book of over £1bn, the highest in Chemring’s history.
“The increase in geopolitical tensions around the world is driving a fundamental rearmament upcycle which is expected to last for at least the next decade.
“This visibility, together with the support of grant funding and our customers’ desire to move to long-term partnering agreements, gives us the confidence to invest further in capacity and capability, reinforcing Chemring’s position as a key supplier to Nato, and positioning the group well for the future.”
Following the results, Chemring said it was raising its dividend by 13pc to 2.6p per share.
The company reported first-half sales of £223m for the six months to the end of April, up by 8pc compared to a year earlier.
But profits fell by 24pc to £18m, with Chemring blaming “adverse weather conditions” that had affected the Tennessee operations of its countermeasures division.
Countermeasures and energetics remain the largest part of Chemring’s business, bringing in 60pc of sales last year.
It is set to benefit from new orders for the F-35, with the US Department of Defence preparing to buy 2,456 of the jets through to 2044.
The UK Ministry of Defence has also confirmed its intention to buy 74 more of the F-35B variant but has yet to set out timescales.
