It added it was yet to see a big increase in demand despite geopolitical tensions in many parts of the world.
Full-year pre-tax profit fell to £30.3m from £51.6m a year earlier.
Revenue fell to £474.9m in the year ended 31 October 2014 from £624.9m a year earlier.
Flare and rocket propellant maker Chemring, whose profit was hit by budgetary cuts in the US, has been selling its non-core businesses since 2012 and pushing into non-Nato markets.
It sold its European ammunitions business to France’s state-owned Nexter Systems for about €168m (£127m) in April to focus on its core defence technology business.
“While there has been growth in some markets, notably the Middle East, these regions are still modest in scale when compared to Nato defence spending,” the company said in a results statement yesterday.
Michael Flowers, who was appointed chief executive in June, said the 12 months to 31 October had been an “important and challenging” for the business and had seen the Hampshire-based company stabilise and improve is operational performance.
He added the period had also seen a “strengthened position on major future US, Nato and broader global programmes”. He noted that the company had been forced to adjust to a new spending environment.