West on target for ‘a decade of rearmament’, warns Chemring boss

The threat of global conflict will lead to a decade of rearmament as the West bolsters its defences, the boss of a UK explosives maker warned.

Michael Ord, chief executive of Chemring, said the ‘increase in geo-political tensions around the world’ has prompted governments to raise military spending.

The FTSE 250 company, which specialises in devices to combat chemical and biological warfare, supplies large defence groups and Nato allies. 

The comments came as it said the value of orders on its books jumped 39 per cent in the first half of the year to a record £1.04billion.

The defence industry has been boosted by increased military spending since the invasion of Ukraine and tensions in the Middle East as well as concerns about China. 

In demand: Chemring, which specialises in devices to combat chemical and biological warfare, supplies large defence groups and Nato allies

‘The momentum seen in 2023 has continued with another period of record order intake and an order book of over £1billion, the highest in Chemring’s history,’ said Ord.

‘The increase in geo-political tensions around the world is driving a fundamental rearmament upcycle which is expected to last for at least the next decade.’

Chemring is expanding its explosives business in response to the heightened demand. 

The rise in the value of its order book came alongside an 8 per cent jump in first-half revenues to £223.4million.

‘We now have the ambition to increase annual revenue to around £1billion by 2030,’ said Ord.

Neil Shah, an analyst at consultants Edison Group, said the £1billion revenue target was ‘optimistic but achievable’.

The company was handed nearly £90million in March to boost defence production across Europe. 

The Government has also recently announced that defence spending in the UK would rise to 2.5 per cent of gross domestic product by 2030.

But despite the bumper order intake, profits fell 24 per cent to £17.5million in the first half of the year. 

The firm blamed this on ‘adverse weather conditions’ at its plant in Tennessee – which makes infrared devices – and higher costs.

Chemring shares, up nearly 50 per cent since the Hamas attacks on Israel in October, were flat at 394.5p yesterday.