- The defence giant revealed its order book totalled £1.35bn as of 30 January
- Bain Capital has reportedly made a £1.1bn takeover offer for Chemring
Chemring Group has reported a record order book amid a push by NATO member states to hike military spending.
The London-listed defence giant is currently in the crosshairs of private equity giant Bain Capital, which has reportedly approached with a takeover offer worth £1.1billion.
Chemring’s order book totalled £1.35billion as of 30 January, a £360million year-on-year increase.
The firm attracted £393million worth of orders during the first quarter, nearly three times the £136.9million it gained during the equivalent period last year.
New contracts include a £36million three-year agreement with SAAB Switzerland to supply the high-explosive chemical HMX.
The FTSE 250 company also struck a multi-year order with an unnamed US prime contractor to supply a high-speed miniature radar altimeter, which can measure how high an aircraft is above the ground.
And its Scotland-based business, Chemring Energetics, recently secured a £23million deal to provide components for the Next Generation Light Anti-Tank Weapon [NLAW].
Flying high: Chemring revealed its order book totalled £1.35billion as of 30 January
Chemring said its current order book and first-quarter sales covered 81 per cent of its anticipated revenues this financial year.
Michael Ord, chief executive of Chemring, said: ‘Our order book is at a record level, and order intake across both sectors benefitted from the receipt of several significant orders, demonstrating continued customer demand and confidence in Chemring’s market-leading products and services.’
British defence contractors have enjoyed a surge in trade over the past few years amid rising geopolitical tensions resulting from the Ukraine war, Israel’s conflict with Hamas and cooling relations between Western countries and China.
European NATO member states have also committed to expanding their military budgets following pressure from US President Donald Trump, who has long accused them of being dependent on the United States.
Prime Minister Keir Starmer announced on Tuesday that the UK would raise defence spending from 2.3 per cent of national income to 2.5 per cent by 2027.
Chemring said this global backdrop offers a ‘significant opportunity’ for the group’s products and services.
Founded in 1905, the Romsey-based company considers itself a world leader in designing and manufacturing countermeasures – systems for repelling enemy attacks.
Sky News reported on Monday that Bain Capital had recently made a 390p-per-share bid valuing the business at £1.1billion.
If the US investment firm is successful, it would represent another major blow for the UK’s defence sector, which has lost high-profile names such as Meggitt, Cobham and Ultra Electronics to foreign takeovers in the past few years.
Analysts at broker Jefferies said Bain’s proposal was ‘a non-starter for us in terms of valuation,’ while Shore Capital believes it ‘does not adequately reward shareholders’.
Chemring was handed a boost of confidence by major investor JO Hambro Capital Management, which praised Ord’s efforts to improve the company’s fortunes.
Chemring Group shares were 4.4 per cent higher at 390p on Wednesday morning, taking their gains since the year started to around 18 per cent.
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