Chemring profits up despite budget cuts

23rd Jun 2011 08:00

Military decoy flare and mine detection firm Chemring managed to post a sharp rise in sales and profits in the half-year to 30 April despite constraints on military spending in Britain and the US.Revenues climbed by 29% from the previous year to £329.8m, while underlying pre-tax profits were up by 17% at £49.6m.Revenues in the Counter-IED business soared by 132% to £95.7m to become the company's biggest division. Revenues were lifted by sales of systems used by the US Army in Afghanistan.Revenues in the Countermeasures division fell 3% to £89.6m. Chemring said a reduction in demand for certain decoys seems to be in anticipation of a phased withdrawal from Afghanistan over the next three years.Munitions revenues were up by 57% at £85.4m and pyrotechnics revenues fell by 14% to £59.1m."The extended timescales for approval of last year's US defence budget, the current UK defence budget constraints, and the shifting approval of export licence applications for various parts of the Middle East have reduced the pace of growth over the last twelve months," the company said. "However, with organic growth of 18% in the first half of the year, strong performances from the Counter-IED and Munitions businesses, an increase in non-NATO customers, and a current order book that is 52% higher than at April 2010, the group remains on course to meet the board's full year expectations."---RG