Sterling dive strengthens defence manufacturer Chemring's order book to the tune of £100m

 
Francesca Washtell
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Chemring's share price lifted four per cent on the open (Source: Getty)

The fall in the value of sterling has bolstered defence equipment manufacturer Chemring's order book to the tune of £103m.

Chemring's order book stood at £593m on 31 October thanks to the pound weakening against the US dollar, the company said in a post-close statement today, up from £569.6m last year.

On a constant currency basis, Chemring's orders fell year-on-year against a strong 2015, which contained a crucial 40mm ammunition contract "to an end user in the Middle East". The contract had been a thorn in its side after a series of delays, but the group said it was progressing "in line with expectations" in August.

Read more: Chemring shares are having a blast after Australian defence contract win

The group said it expects results for the year to the end of October to be in line with market views, with an added "slight upside" from foreign exchange gains.

Final-quarter revenue at the group, which makes products including detectors, surveillance systems and flares for military aircraft, rose around 51 per cent to £188m. Full-year revenue was approximately £477m, up from £377.3m.

Read more: Chemring relies on Middle East orders for profit

The Hampshire-based company warned on its full-year profits in June and has struggled with high debt levels and repayment costs. Net debt stood at around £88m on 31 October, Chemring said today, down from £147m in July.

Chemring still has £153.4m outstanding in US private placement loan notes, of which £29.5m will be repaid today from "existing cash resources". The group will pay £55.4m in November 2017 and £68.5m in November 2019.

The group's shares opened up four per cent to 163.25p today and were trading around two per cent higher at 159.75p in the early afternoon.

Its stock still hasn't fully recovered from a nosedive in February, after it reported widening losses in January, which took its share price down to around 117p.

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