Chemring Group Reports Strong FY25 Performance with £1.3bn Order Book and Key Contract Wins

FY26 order cover	Cover
Countermeasures & Energetics	c.95% (31 Oct 2024: 97%)
Sensors & Information	c.47% (31 Oct 2024: 48%)

Energetics contract wins: NLAW, HMX and aircrew safety systems

Energetics continues to do the heavy lifting. New wins span the US, UK and Norway, with delivery schedules that stretch well into the decade – useful for planning and capacity loading.

• US: Chemring Energetic Devices won a five-year US$65m sole-source framework plus base-year delivery orders of US$38m for SCOT and JCAST aircrew flight equipment tester systems. Work runs to June 2030 in Downers Grove, Illinois.
• UK: Chemring Energetics UK secured a £24m order for NLAW rocket motors and critical components, with deliveries in 2027-2028. This follows a £23m NLAW award in February 2025. Since March 2023, CEUK has booked £90m of NLAW orders, with more expected in the first half of 2026.
• Norway: Chemring Nobel landed a £23m contract from Nammo for various HMX products, with deliveries from 2027 through 2037.

Opinion: These wins underscore structural demand for energetics – propellants, high-integrity devices and specialty energetic materials. The long-dated delivery windows suggest sustained revenue visibility, though investors should remember the cash and profit recognition follows delivery schedules.

Countermeasures momentum: Australia and NATO orders

Countermeasures also had a good half with two notable awards:

• Australia: Chemring Australia won a US$35m contract from the Commonwealth of Australia for airborne countermeasures, with deliveries completing by October 2027.
• UK/Europe: Chemring Countermeasures UK secured a £15m NSPA order for a European NATO member, with deliveries in FY28 and FY29.

Opinion: These orders help keep the lines warm through the later 2020s and balance the book across geographies. They also offset weakness at Alloy Surfaces in the US (see below).

Sensors & Information: Roke wins ZODIAC but UK ordering is slow

Roke, Chemring’s S&I business, keeps notching up strategically important contracts, even as UK Government short-term order placement remains slower than usual. During H2, Roke received more than £40m in National Security contract renewals and won a £20m deal to deliver the next phase of Project ZODIAC for the British Army.

ZODIAC is the backbone of the Army’s Land ISTAR programme – think integrated intelligence, surveillance, target acquisition and reconnaissance to enable data-led decisions. Roke is the Prime Systems Integrator, with deliveries that began late FY25 and mostly fall in FY26; a follow-on contract is expected to take the programme to late FY27.

Opinion: The pipeline looks strong, and winning prime roles is strategically valuable. The near-term drag from delayed UK orders remains the watch-out for revenue timing in S&I.

Alloy Surfaces discontinued: clearing the decks in US countermeasures

Demand from the US Department of Defense for ASC’s pyrophoric airborne decoys has significantly decreased, leaving the site underutilised. Chemring is now reviewing strategic options, including a sale of the business or assets, and will present ASC as a discontinued operation in the FY25 accounts.

ASC is expected to report a loss of about £3m as part of discontinued operations, and the FY25 results will include several one-off costs, around £5m of which are cash-related. For context, annual normalised revenue for ASC would have been about £25m and operating profit about £3.5m, but the current demand picture no longer supports continuous manufacturing.

Opinion: Painful but pragmatic. Exiting or selling ASC should streamline the portfolio and sharpen focus on areas with better visibility and pricing power.

Landguard acquisition strengthens Roke’s radio and security offering

The Landguard Group deal completed on 29 August 2025. Landguard designs and supports software-defined radio systems and security products for defence, government and law enforcement. Management expects this to enhance and accelerate growth at Roke while driving operational synergies.

Opinion: Sensible bolt-on. It broadens S&I capabilities at a time when Chemring is leaning into technology-led defence solutions.

Why this update matters for investors

• Visibility: A £1.3bn order book and c.95% FY26 order cover in C&E underpin revenue and capacity planning.
• Margin trajectory: Group margin improving to c.14.7% suggests mix and execution are working, led by Energetics.
• Portfolio pruning: Discontinuing ASC should remove a drag and simplify the story, albeit with near-term costs.
• Timing risk: S&I order delays and several long-dated delivery schedules push some revenue into later years.

What could move the shares next

• 9 December 2025 full-year results: detail on cash flow, net debt, adjusted EPS and the outlook for FY26.
• Alloy Surfaces outcome: clarity on a sale or closure, and any associated cash costs or proceeds.
• UK Government orders: acceleration in S&I would be a clear positive for near-term growth.
• New awards: further NLAW and other Energetics orders flagged as likely in H1 2026.

Jargon buster

• Adjusted operating profit: underlying profit from operations, excluding one-offs.
• Adjusted EPS: earnings per share excluding one-offs and certain non-cash items.
• Order book: contracted future work not yet delivered.
• Order cover: the proportion of next year’s expected revenue already under contract.
• Discontinued operation: a business being exited or sold, reported separately from continuing operations.

My take: a robust core with a sensor wobble

This is a solid post-close from Chemring. Energetics is humming, margins are grinding higher, and the order book is the strongest it has been for years. Countermeasures outside the US is doing its bit, and Roke continues to win meaningful work despite sluggish UK ordering.

The obvious blemishes are the ASC write-down and the timing drag in S&I. But strategically, trimming ASC while doubling down on Energetics and high-end Sensors looks the right call. If UK order flow normalises and the Group keeps converting pipeline into long-dated, well-priced contracts, the investment case should continue to harden.

Results land on 9 December. I’ll be watching cash conversion, the path for net debt, and how management frames FY26 demand and pricing. For now, the outlook remains robust, and the numbers support that narrative.