Chemring ups dividend despite dollar impact

Chemring increased its final dividend as the company reported an 8% increase in annual underlying profit despite a weakening of the US dollar.

Underlying pretax profit for the year to the end of October rose to £55.9m from £51.7m a year earlier as revenue dropped 2% to £393.3m.

Excluding currency movements, the FTSE 250 group's profit rose 13% and revenue increased 1%. Statutory pretax profit increased to £48.8m from £43.3m.

The defence and security technology group proposed a final dividend of 3.2p a share, up 23% from a year earlier, as it adopted a target of dividends covered 2.5 times by earnings. The announcement took the annual payout to 4.8p a share.

Chemring said trading so far in the current financial year was in line with expectations and its expectations were unchanged. The rest of the year will be similar to the previous year with a slight bias towards the second half, it said.

The group order book was £501m at the end of October with £358m expected to be recognised in the current year, Chemring said. More than half of Chemring's profit is in US dollars.

"Overall 2021 performance was in line with our expectations despite the foreign exchange headwind caused by the weakening US dollar," Chemring said. "The board's objective is for a growing and sustainable dividend and now believes it is appropriate for the group to target a medium-term dividend cover of c.2.5 times underlying EPS, subject inter alia to maintaining a strong financial position."