Chemring interim losses narrow, dividend reinstated

Defence group Chemring reported a narrowing of its first-half losses on Thursday as revenue grew and the company reinstated its dividend.

For the six months to 30 April, statutory pre-tax losses came in at £6.8m compared to £16.8m the year before, as revenue rose to £249.6m from £180.1m, benefiting from the drop in sterling in the aftermath of the Brexit vote. Underlying operating profit, meanwhile, rose to £17.2m from £3.8m in the first half of 2016.

Chief executive Michael Flowers said: "In the first half of 2017 the group has continued to build on its H2 2016 performance, with solid order intake and revenue delivery from its operations. The consistency of manufacturing operations across all sites continues to improve, delivering more predictable revenue flow and improved margins.

The Operational Excellence Programme, designed to further enhance safety, improve gross margins and cash conversion, is underway with initiatives launched in support of lean operations, supply chain management, integrated sales and marketing operations and safety maturity. Combined with ongoing site consolidation and cost base management efforts, this is expected to improve both delivery and margin performance over time."

Chemring reinstated its dividend with a 1.0p per share payout and said its expectations for FY2017 remain unchanged. The company expressed confidence in its outlook, noting that around 85% of expected second-half revenue is in the order book.

At 1030 BST, the shares were up 5.2% to 196p.