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Chemring 64pc profit bonanza is not a decoy.

Defence countermeasures manufacturer Chemring Group said its core division had increased its order book by 14 per cent as it announced a 64 per cent rise in interim pretax profits on continuing operations to pounds 11.8 million.

Chemring, which makes decoys to deflect missiles from aircraft, said the countermeasure division's alloy surfaces operations had seen record growth in turnover and profit.

Profits at countermeasures' other two main units, Kilgore and Chemring Countermeasures, lifted fourfold and by 32 per cent respectively.

Decoy production at Kilgore hit over 8,000 units a day. A new large flare facility to supply additional flares to the US Air Force is being built, and production will commence in the second half of the year.

Chemring Countermeasures saw a substantial increase in demand from the Ministry of Defence to support peacekeeping operations in Afghanistan. It also managed to capture important NATO contracts for naval countermeasures.

The group, based in Fareham, Hampshire, said its energetics division increased its order book to pounds 65 million from pounds 9 million last time, while plans for divesting its remaining marine businesses are ongoing.

Within energetics, Derby-based PW Defence had an excellent start to 2006, with sales volumes up 41 per cent compared with the first half of 2005, principally driven by the peacekeeping requirements of several countries, including the UK. Several large NATO contracts for battlefield simulation products were secured, and the start-up of low-cost manufacturing in Estonia was successfully completed.

The group said basic earnings per share increased by 81 per cent to 26.02 pence and the interim dividend to shareholders rises 50 per cent to 4.8 pence.

Chairman Ken Scobie said the company's countermeasures division still commands more than half of the world market for expendable countermeasures and had continued to see a considerable increase in profits.

"This, combined with the solid start to the year seen in the energetics division, has helped deliver very strong and encouraging operational and financial performances in the first half," he said.

"I anticipate the full-year results will demonstrate further the group's potential, our growing presence in the defence industry worldwide and our ability to generate value for our shareholders."

Operating profit increased by 69 per cent to pounds 14.4 million. Turnover hit pounds 82.6 million against pounds 48 million last time.

Four acquisitions were completed during the period - Comet in Germany, Technical Ordnance in the US, and Leafield Engineering and Leafield Marine in the UK.

They contributed pounds 9.7 million of revenue and pounds 1.2 million of operating profit to the group in the first half. The company said their integration was now "well under way".


Chemring produces countermeasures, and (below) an ejector seat as produced by the Energetics division
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Title Annotation:Business
Publication:The Birmingham Post (England)
Date:Jun 28, 2006
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