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Chemring banking on higher U.S. defence spending

Published 21/06/2018, 08:00
© Reuters.  Chemring banking on higher U.S. defence spending
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(Reuters) - Defence equipment maker Chemring Group Plc (L:CHG) on Thursday reported a 5.2 percent rise in six-month operating profit and said its full-year outlook remained positive as it expects to benefit from higher U.S. defence spending.

Chemring, like other defence contractors, has been looking to profit from defence spending by the United States under President Donald Trump, who has called for a bigger and stronger military. The U.S. Senate passed a $716 billion (543.87 billion pounds) defence policy bill earlier in the week.

"Market conditions and business performance in the first half of 2018 have continued to strengthen, with margins and earnings improving across the group," said chief executive officer Michael Flowers, who is set to retire and step down from the company's board by the end of this month.

The company, which makes flares, equipment to detect improvised explosive devices and mechanisms used in ejection seats, stuck to its forecast for the current fiscal year.

Chemring's operating profit rose to 18.1 million pounds, in the six months ended April 30, from 17.2 million pounds reported a year earlier.

However, first-half revenue fell 8.1 percent to 229.3 million pounds, hurt partly by lower deliveries of a certain type of ammunition to Middle Eastern customers.

The Fareham-based company said the total amount of its current orders was 442 million pounds, compared with 478 million pounds in fiscal year 2017, hit in part by a weaker U.S. dollar.

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