Chemring Group – record Order Book and strong defence demand will drive shares higher, now 484p, new SQC Target Price 580p

Mark Watson-Mitchell – 02.06.2026

This morning Chemring Group (LON:CHG) reported interim results for the six months to end-April, showing revenue up 6.5% to £237.3m, driven by strong performance in Countermeasures & Energetics.

The company achieved a record closing Order Book of £1.4bn, providing significant medium-term revenue visibility.

Underlying operating profit decreased by 7.5% to £24.5m, resulting in a lower operating margin of 10.3%, attributed to business mix and utilisation rates in Sensors & Information.

The interim dividend per share increased by 4% to 2.8p, and net debt rose to £144.5m due to investment in Energetics capacity.

Full-year expectations remain unchanged, with 91% of projected 2026 revenue already secured.

The Business

Chemring is a global leader in high-technology products and services for the defence, security and aerospace markets.

The group employs approximately 2,700 people worldwide, operates production facilities in four countries, and serves customers in more than fifty countries.

It is organised into two strategic product segments: Countermeasures & Energetics and Sensors & Information.

The diverse portfolio of the group delivers highly reliable solutions that protect people, platforms, missions and information against evolving threats.

Management Comment

CEO Michael Ord stated that:

"These results reflect strong demand across our core markets, with our order book reaching a new record level.

First half performance was in line with our expectations, despite near-term disruption in the UK market, and our full year outlook remains unchanged.

Our energetics expansion programme is progressing at pace, with Chicago complete and ramping production, Scotland progressing through commissioning, and Norway advancing through its next phase.

Meanwhile Roke has continued to make further progress as it grows its products business, securing early domestic and international sales of its new counter-drone system.

Against a backdrop of geopolitical instability, a shift towards high‑intensity deterrence and higher defence and national security spending, we continue to invest in the capabilities and capacity our customers need most.

Demand in Countermeasures & Energetics remains particularly strong, supported by operational usage, stockpile replenishment and new programmes, and Chemring is well positioned to deliver further growth and long-term value."

Markets

Elevated defence and national security spending is increasingly seen as a structural feature of the geopolitical environment, rather than a temporary response to current conflicts and regional tensions.

Across NATO, planning assumptions have shifted towards territorial defence and peer-conflict readiness, supporting structurally higher budgets.

In Europe, defence spending is expected to continue rising as governments prioritise sovereign capability, common procurement and secure localised supply chains.

Key priorities include munition and missile stockpiles, integrated air and missile defence, drone capabilities, cyber-enabled operations, and command-and-control systems; with the group well positioned to support these areas of customer demand.

In the UK, while near-term fiscal pressures may affect the pace of spending, the long-term direction of travel remains supportive, and the publication of the UK's Defence Investment Plan is expected to support a return to more normal levels of UK Government order placement.

In the US, defence priorities remain focused on strategic competition between major powers, supporting investment in advanced capabilities including long-range strike missiles, integrated air and missile defence, cyber, space systems and next-generation platforms.

As a supplier into the US space and missiles sector, Chemring is well placed to benefit from this demand environment.

Overall, the market backdrop remains supportive, with structurally higher defence and national security spending creating sustained demand across the group’s core markets.

Outlook - full year and longer term

The Board's full year expectations are unchanged, supported by 91% of expected 2026 revenue either delivered or in the order book at end-April.

Operating profit is expected to be weighted c.70% to H2, reflecting scheduled programme deliveries, customer acceptance timing and the phasing of Sensors & Information contract activity and awards.

Countermeasures & Energetics is expected to continue its strong performance in the second half, while Sensors & Information is expected to improve as international product sales and delayed domestic opportunities progress.

The group remains focused on cash generation and maintaining a robust balance sheet to support further growth.

Capital allocation will remain disciplined, with priority given to organic investment, balance sheet strength and value-enhancing opportunities.

The market backdrop remains supportive, with structurally higher defence and national security spending reinforcing long-term demand across the Group's core markets.

Chemring's longer-term growth prospects are underpinned by robust activity levels, differentiated technologies, strong market positions, high barriers to entry, a substantial order book and pipeline, and continued investment in the business.

With market-leading innovative technologies and services that are critical to its customers, the Board remains confident in the group’s ability to deliver both organic and inorganic growth, while balancing near-term performance with longer-term value creation.

The Board also remains confident in its medium and longer-term financial objectives.

Outlook - full year and longer term

The Board's full year expectations are unchanged, supported by 91% of expected 2026 revenue either delivered or in the order book at end-April.

As previously guided, operating profit is expected to be weighted c.70% to H2, reflecting scheduled programme deliveries, customer acceptance timing and the phasing of Sensors & Information contract activity and awards.

Countermeasures & Energetics is expected to continue its strong performance in the second half, while Sensors & Information is expected to improve as international product sales and delayed domestic opportunities progress.

The Group remains focused on cash generation and maintaining a robust balance sheet to support further growth.

Capital allocation will remain disciplined, with priority given to organic investment, balance sheet strength and value-enhancing opportunities.

The market backdrop remains supportive, with structurally higher defence and national security spending reinforcing long-term demand across the Group's core markets.

Chemring's longer-term growth prospects are underpinned by robust activity levels, differentiated technologies, strong market positions, high barriers to entry, a substantial order book and pipeline, and continued investment in the business.

With market-leading innovative technologies and services that are critical to its customers the Board remains confident in Chemring's ability to deliver both organic and inorganic growth, while balancing near-term performance with longer-term value creation.

The Board also remains confident in the Group's previously stated medium and longer-term financial objectives.

The Equity

There are some 272.12m shares in issue.

The larger holders include Albion River Management (9.17%), BlackRock, Inc. (8.27%), Schroder Investment Management (6.27%), The Vanguard Group, Inc. (5.42%), Capital Research and Management Company (5.03%), Aberdeen Group Plc (4.47%), Royal London Asset Management (3.78%), Artisan Partners Limited Partnership (3.18%), Janus Henderson Group (2.91%), Hargreaves Lansdown Asset Management (2.13%), UBS Asset Management AG (2.04%), Invesco Ltd. (2.01%), Legal & General Investment Management (1.68%),  AXA Investment Managers (1.59%), Columbia Management Investment Advisers (1.54%), Barrow, Hanley, Mewhinney & Strauss (1.41%), Dimensional Fund Advisors (1.34%), HSBC Global Asset Management (UK) (1.33%), Mirae Asset Global Investments (1.22%), Irenic Capital Management (1.15%), GWL Investment Management (1.15%), Canaccord Genuity Wealth (International) (0.99%), and Artemis Investment Management (0.99%).

Broker Views

Some six broking firms closely follow the group, four of whom call the shares as a Buy, one as a Hold and the sixth to Outperform.

The Highest Target Price is for 670p, the Lowest at 537p, the average is currently around 620p.

Estimates for the current year to end-October are for £545.35m in revenues, with pre-tax profits of £80.35m, earnings of 20.00p and paying a dividend of 8.25p per share.

For the coming year, they see revenues of £626.45m, £98.30m profits, earnings of 24.94p and a 9.97p dividend.

The year to end-October 2028 estimates suggest £700.60m revenues, with £114.72m profits, 29.89p earnings and a dividend of 11.54p per share.

My View

After having fallen back to 484p in reaction to profit-taking after today’s results, this group’s shares offer a load of appeal to investors looking for growth and ongoing prospects.

I now set a new SQC Research Target Price of 580p.

(Profile 20.06.19 @ 177p set a Target Price of 300p*)

(Profile 20.10.23 @ 278p set a Target Price of 350p*)

(Profile 04.12.25 @ 475p set a Target Price of 550p*)

(Profile 02.06.26 @ 484p set a Target Price of 580p)