Results round-up
Defence contractor Chemring said on Thursday that it swung to a first-half profit and that it expects to continue to gain from increased US defence spending.
In the six months to 30 April, the company made a statutory pre-tax profit of £4.3m versus a loss of £6.8m in the same period a year ago, with underlying operating profit up 5% to £18.1m. However, revenue fell 8% to £229.3m.
The company’s countermeasures segment performed particularly well, driven by improving customer demand and continued consistency of operational performance across the segment.
The order book fell to £441.5m from £556.2m and Chemring said the reduction since October was down to the weaker US dollar and delivery of 40mm and non-standard ammunition orders, which were offset by an increase in Countermeasures driven by strong order intake in the US and UK.
Chemring declared an interim dividend of 1.1p per share, up from 1p, and said its expectations for the full year remain unchanged.
Chief executive Michael Flowers said: "Market conditions and business performance in the first half of 2018 have continued to strengthen, with margins and earnings improving across the group. We expect this trend to continue as the impact of significant increases to the US defence budget start to flow through, with the group maximising the impact of these improvements through improved delivery performance resulting from the Operational Excellence Programme.
“In light of strong order book cover and improved performance, the board's outlook for FY 2018 remains positive, with expectations unchanged. As previously highlighted, we expect a stronger contribution from countermeasures and scheduled reductions in energetics."
Shearwater expects annual results near the top of its expectations after the digital security company's main businesses improved their performance.
In the financial year to the end of March revenues were £6.3m, reflecting 11 months of trading from SecurEnvoy and eight months of trading from Xcina Consulting.
SecurEnvoy’s revenue increased 17% to £3.4m and Xcina, which was loss-making when Shearwater bought the authentication software business in July 2017, is generating earnings and trading ahead of expectations.
Xcina, a consulting and cyber threat business, has gained more than 30 new customers since joining Shearwater and racked up revenue of £2.9m.
Shearwater’s goal is to build a “digital resilience” group by buying information security and cyber security businesses with leading products or services. The AIM-traded company said it was on the lookout for further acquisitions.
Shearwater said it “anticipates announcing full year results at the upper end of the Board's expectations during August 2018”.
David Williams, Shearwater’s chairman, said: "Throughout 2018 we have continued to build upon the transformational steps taken since we launched our new digital resilience strategy. Each of our portfolio companies has made substantial progress since joining the group.
“The quality of our M&A pipeline suggests that we will have the opportunity to substantially grow, both through further organic growth and potential acquisitions, during this new financial year."