Chemring Group PLC

FY25 reported revenue increased 2% to GBP 498 million. Operating profit rose 6%, with operating margin improving to 14.8% from 14.3%. EPS was 19.4p, up 3%, and cash conversion was 114%, with operating cash of GBP 112 million. Order intake was GBP 781 million, up 20%, and the order book reached a record GBP 1.3 billion, up 32%. Within segments, Countermeasures & Energetics revenue grew 17% and operating profit rose 37% to a 19.1% margin; Sensors & Information revenue fell 18% and operating profit fell 25%, with margin at 17.8%. The Board declared a final dividend of 5.3p, taking the full-year dividend to 8p, up 3%. For FY26, management said trading guidance is unchanged, with 76% revenue cover already secured; Countermeasures & Energetics is targeted for low double-digit growth and Sensors & Information for mid-double-digit growth. They expect Roke to return to near FY24 revenue levels in FY26, with growth in the second half, interest costs of about GBP 10 million, CapEx of GBP 100 million to GBP 110 million, and cash conversion of 80% to 85% as growth investments continue.

Michael Ord emphasized that FY25 showed Chemring can grow despite short-term headwinds, especially weak UK government order placement that affected Roke. He framed the business as exposed to a long defense upcycle driven by NATO burden-sharing, Ukraine, and Asia-Pacific tensions, and pointed to the record order book as evidence. Strategically, he stressed Chemring’s focus on sovereign manufacturing, innovation, and capacity expansion, while reiterating the long-term goal of GBP 1 billion in annual revenue by 2030.

James Mortensen highlighted an across-the-board improvement in key metrics: revenue up 2% to GBP 498 million, operating profit up 6%, margin up to 14.8%, EPS up 3% to 19.4p, and cash conversion at 114%. He noted that closing net debt was GBP 89 million, or 0.90x leverage, and that the company returned GBP 26 million to shareholders while also investing GBP 76 million in Energetics and GBP 29 million in automation and maintenance, offset by GBP 24 million of grants. Looking ahead, he guided to FY26 CapEx of GBP 100 million to GBP 110 million, interest costs of about GBP 10 million, and cash conversion of 80% to 85%, with leverage targeted below 1.5x and dividend cover expected to remain at 2.5x.

Analysts focused on whether Roke’s second-half recovery was realistic, and management said the rebound should come from products and national security work rather than STORM alone, with renewal season in April and May expected to be strong. Questions on Energetics centered on customer vertical integration, Norway cost overruns, and the GBP 1 billion revenue ambition; management said customer integration should not hit Chemring’s market because their main customers are different, Norway cost increases were driven by geology and infrastructure scope, and the 2030 target can be reached through a mix of organic expansion and bolt-on M&A. There was also discussion of UK energetics opportunities, Germany, and working capital, with management saying advanced payments are likely to remain a feature of the tight Energetics market.