Chemring Group PLC (LON:CHG) has provided a trading update for the year ended 31 October 2026 and announces several strategic contract wins.
Key points:
- Record order book of £1.4 billion at 31 October 2026 (31 October 2025: £1.3 billion)
- Further progress on securing multi-year strategic contracts, providing increased visibility
- Subject to audit, FY26 underlying operating profit expected to be c.£79 million
- FY26 underlying EPS expected to benefit from modestly lower interest costs than previously expected
- Net debt of c.£145 million as at 31 October 2026
- Board expectations of material earnings growth in FY27 maintained
- Strategic review of US Sensors business
The Board continues to believe that the Group’s strategy has positioned the Group well to capitalise on significant long-term growth opportunities and is confident that continued strong execution will generate sustained value creation and attractive returns for shareholders. The Board actively manages the Group’s portfolio and capital to maximise long-term value for shareholders, as demonstrated by the decision to initiate a sale process for its US Sensors business.
Michael Ord, Group Chief Executive, commented:
“Our record order book and strategic contract wins demonstrate the strength of our business and the successful execution of our strategy. 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. Our longer-term prospects remain compelling.”
FY26 year-end update
Strong demand across Chemring’s core markets has led to a record order book of £1.4 billion, providing a firm foundation for long-term growth.
The Countermeasures & Energetics segment performed strongly. Within Sensors & Information, Roke’s order intake reached record levels in FY26, demonstrating a strong recovery and providing improved visibility over FY27 earnings. However, Roke’s FY26 performance was below expectations due to delays in defence contract awards, principally from the UK Ministry of Defence (“UK MOD”) and sales of electronic warfare systems to international customers. These delayed defence programmes remain active opportunities, with customer engagement ongoing.
Based on unaudited management information, the Board expects the Group’s underlying operating profit for FY26 to be c.£79 million. The Group has delivered in excess of £50 million of underlying operating profit in the second half. Net debt as at 31 October 2026 stood at c.£145 million, with the improvement on expectations largely driven by timing of capital expenditure.
Restructuring at our US Countermeasures business, Kilgore Flares, has continued as outlined at the half-year results. All legacy facilities have now closed, with associated workforce reductions, and operations are now concentrated in the fully automated facility, and inventory costing levels under review. The restructuring may result in non-underlying and non-cash provisions and adjustments including a non-cash impairment charge of c.£50 million alongside exceptional cash costs of c.£3.5 million.
Outlook
The Board remains confident in the outlook for the Group and continues to expect strong year-on-year earnings growth in FY27, supported by the order book scheduled for delivery during the year. The Group will provide more detail on the key drivers with the full year results. Underlying operating profit is expected to be more evenly weighted between H1 and H2 in FY27 reflecting scheduled programme deliveries.
Increased investment in defence, security and resilience across the Group’s key markets supports Chemring’s long-term growth prospects. Our leading positions in military explosives, space & missiles, countermeasures, electronic warfare and information-led services, together with a record order book and an expanding opportunity pipeline, provide a strong foundation. Roke’s substantial pipeline of strategic opportunities with UK Government and allied customers offers further growth potential, with the timing of awards dependent on customer procurement processes.
The Group’s investment in capacity, technology and innovation continued throughout FY26 to support sustainable growth and long-term value creation. The capacity expansion programmes in Energetics in particular are expected to drive significant and sustained growth once the existing expansion projects in Scotland and Norway enter production in 2027 and 2028 respectively. These projects are separate from the potential additional military explosives facility in Norway described below.
Energetics capacity expansion
The feasibility study for a new military explosives facility in Norway continues to make good progress. The Norwegian Government’s proposed 2027 State Budget includes an additional NOK186 million (£15 million) of support for further feasibility work for Chemring Nobel. Subject to approval, this would bring total funding support to NOK 390 million (£31 million), with further grants expected. The proposed funding reinforces the project’s status as a national defence industrial priority and is intended to advance the project towards a potential investment decision during 2027.
Contract wins – Energetics
Chemring Energetics UK (CEUK) has secured a seven-year sole-source framework agreement with the UK MOD worth up to £100 million for demolition stores and explosives. An initial three-year production contract worth £23 million was awarded alongside the framework, with deliveries commencing in 2027. CEUK has also secured a £10m contract with Kongsberg Defence & Aerospace for the supply of Naval Strike Missile components. Both production contracts will be delivered from Ardeer, Scotland. CEUK ended FY26 with a record order book exceeding £150 million.
Contract wins – Countermeasures
Chemring Countermeasures UK (CCM UK) has secured a sole-source framework agreement with the UK MOD worth up to £120 million to supply and support air and naval countermeasures. The framework runs from July 2026 to March 2031, with options for three one-year extensions. An initial £9.4 million production contract runs through to March 2030 and will be delivered from CCM UK’s site near Salisbury, UK. The award builds on CCM UK’s record order book and strengthens long term revenue visibility.
Contract wins – Sensors & Information
Roke has signed a five-year strategic partnering agreement with a major US prime contractor to supply its high-speed Miniature Radar Altimeter (MRA). The agreement is expected to be worth at least US$170 million, including an initial US$16 million production order covering the first 12 months. Deliveries commenced in October 2026.
The agreement advances Roke’s strategy to grow international sales of defence products and systems and extends Chemring’s role in space and missile programmes beyond Energetics.
Sale of US Sensors business
Following a strategic review of the Group’s US Sensors business, Chemring Sensors and Electronic Systems (“CSES”), the Board has decided to initiate a sale process. CSES holds a strong market position as the sole-source supplier of biological warfare agent detectors to the US Department of Defense. The Board has concluded that CSES would have greater opportunities to develop as part of a broader portfolio of chemical, biological, radiological, nuclear, and explosive (CBRNE) detection capabilities, which the Group does not intend to build, and that it would therefore be better positioned under alternative ownership. The sale will allow management to continue to focus on Countermeasures & Energetics and on Roke. Going forwards, CSES will therefore be classified as a held-for-sale asset, and reported as a discontinued operation. There are likely to be certain non-underlying and non-cash provisions and adjustments; details will be provided when the Group releases its full year results.
Full year results date
Results for the year ended 31 October 2026 will be released on 8 December 2026.
