Chemring Group (LON:CHG) said first-half trading was in line with expectations and reiterated its full-year outlook, supported by a record order book and stronger order visibility across its defense and national security businesses.
Chief Executive Michael Ord said the group had seen “encouraging” order inflow in recent months despite headwinds in the U.K. market. At April 30, approximately 91% of forecast 2026 revenue had either been delivered or was already in the order book, which Ord said reinforced confidence in the full year.
“Market demand is strong, as growing geopolitical instability drives a shift to high-intensity deterrence and structurally higher defense and national security budgets,” Ord said during the interim results presentation for the six months ended April 30, 2026.
The company reported a record order book of GBP 1.4 billion, up 8%, while revenue increased 7%. Chief Financial Officer James Mortensen said operating profit and operating margin were lower year over year, which flowed through to earnings per share. Cash conversion was also lower in the first half, reflecting working capital investment to support expected second-half deliveries.
Chemring declared an interim dividend of GBP 0.028, up 4%. The company also returned GBP 19 million to shareholders in the period, including GBP 14 million through dividends and GBP 5 million through a buyback.
Countermeasures and Energetics drive growth
Mortensen said the Countermeasures & Energetics segment delivered another strong performance, with revenue up 9% as businesses ramped production to meet customer demand. Operating profit in the segment rose 32%, and the margin increased to 18.4%.
The margin improvement was driven by better commercial terms and operational execution, Mortensen said. The segment also had strong order cover, with the current year nearly fully covered and 81% and 68% coverage for the following two years.
Ord said Chemring’s capabilities are aligned with customer priorities in areas including long-range strike missiles, integrated air and missile defense, space, cyber and electronic warfare, and counter-drone technologies. He said demand for high-grade military explosives such as HMX and RDX remains constrained across the NATO industrial base, creating opportunities for Chemring as governments and prime contractors seek more resilient supply chains.
Ord also highlighted air and naval platform protection as a growth area. Chemring secured GBP 123 million of countermeasures orders in the first half, up 486% year over year, with demand primarily from European customers. He said the company’s countermeasures protect approximately 85% of NATO air fleets and 60% of NATO naval fleets, and that platform survivability remains “mission-critical” as missile threats increase.
Sensors and Information returns to revenue growth
In Sensors & Information, Mortensen said revenue rose 3% and order inflow increased nearly 60%, reflecting stabilization at Roke and strength in national security. The segment’s order cover improved to 84%, compared with 64% a year earlier.
However, operating profit and margin were lower. Mortensen cited three factors: maintaining operational capability at Roke despite lower utilization, early CORTEXA pre-production units carrying lower margins, and low-margin pass-through revenue related to the GBP 251 million Missile Defense Center project.
Ord said national security and law enforcement remain central to Roke, with approximately GBP 40 million of program renewals secured to date. He said Roke is also working to broaden its international customer base as the business manages near-term headwinds linked to the delayed publication of the U.K.’s Defence Investment Plan.
Roke’s defense products business has a five-year international sales pipeline of more than GBP 300 million, Ord said. The CORTEXA GUARDIAN counter-drone system, launched in April 2026, has already made sales in Sweden and the U.K., with multiple opportunities in sales conversion.
Expansion projects remain on track
Chemring said its energetics expansion projects are progressing as planned. Mortensen said the Chicago project is complete, on budget and on schedule, with fit-out completed and production ramping. The Scotland project is also on budget and on schedule, with construction complete, machinery installed and commissioning underway. Revenue from that site remains expected in 2027.
In Norway, phase one is complete and on budget, while phase two is progressing, with groundworks nearly complete and concrete foundations laid for nearly all buildings. Across the expansion projects, Chemring said it remains on track to deliver GBP 100 million in revenue and GBP 30 million in operating profit by 2028.
The company is also advancing work on a potential second site in Norway. Mortensen said a location has been identified about 25 kilometers southwest of the current site, and Chemring is in the concept selection phase, funded by the Norwegian government with around GBP 16 million. The company expects to report on that work in early 2027.
Cash conversion expected to improve in second half
Cash conversion was 42% in the first half, which Mortensen said mainly reflected higher safety stocks and inventory secured for expected second-half revenue. Chemring expects full-year cash conversion of 80% to 85%, supported by a stronger second half.
Capital expenditure totaled GBP 44 million, reflecting progress across expansion projects. Net debt rose to GBP 145 million, or 1.5 times leverage, and Mortensen said the company expects net debt to rise further in line with market expectations during the peak investment phase.
Chemring signed an additional GBP 80 million UKEF facility, which will replace the current UKEF facility as it expires. Together with its revolving credit facility and U.S. overdraft, the company said it has GBP 342 million of available facilities.
Management addresses customer demand and U.K. delays
During the question-and-answer session, Ord said Chemring is in discussions with the U.S. Department of Defense about reactivating Alloy Surfaces, its Philadelphia-based pyrophoric decoys business. He said the company is “highly confident” of a positive outcome and indicated that discussions relate to a longer run period of three to five years, rather than a single batch.
Asked about the GBP 251 million STORM framework contract, Ord said only about GBP 22 million had been called off to date and acknowledged uncertainty over the U.K. Ministry of Defence’s procurement timing. However, he said integrated air and missile defense of the U.K. homeland remains high on the priority list.
Mortensen said full-year guidance remains unchanged, supported by the 91% order cover and improving performance in the second quarter. He said about 70% of operating profit is expected in the second half. While Chemring has not seen supply chain issues and is well hedged on energy for the year, he said the company continues to monitor the impact of the Middle East situation.
Ord said defense spending is moving onto a structurally higher trajectory, with NATO shifting toward territorial defense and peer conflict readiness. “I remain confident that Chemring is well positioned for strong future growth,” he said.
About Chemring Group (LON:CHG)
We are a specialist manufacturing and technology business creating market-leading innovative solutions to meet our customers' complex needs. Using our extensive science and engineering expertise, we turn ideas into reality, designing and developing critical solutions that protect and safeguard in unpredictable environments in today's increasingly unstable world. We achieve this by innovating at every stage of the value chain, from research and development (“R&D”) through to design, manufacture and in-service support, working closely with our customers to deliver products, services and solutions for mission-critical success. Our customer base spans national defence organisations, security and law enforcement agencies, as well as commercial markets such as space and transport.
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