November 21, 2016 / 8:47 AM / 3 years ago

Chemring says order book value boosted by weak sterling

(Reuters) - British defence contractor Chemring Group Plc (CHG.L), which has been struggling with defence budget cuts in its key markets, said on Monday the value of its order book was boosted by 103 million pounds due to a weak sterling.

Shares of the company were trading up 2.5 percent at 160.50 pence on Monday on the London Stock Exchange, as J.P. Morgan, Investec and Panmure Gordon & Co analysts lifted their price targets on the stock.

Chemring, which makes ejector seats for fighter jets and flares used to counter heat-seeking missiles, has been struggling with defence budget cuts in key markets such as the Middle East, which has been hit by a slump in oil prices.

All three analysts pointed to the company’s net debt position at Oct. 31 and Chemring’s order book in raising their price targets. Panmure Gordon also raised its rating on the stock to “buy” from “hold.”

Chemring also said its net debt at Oct. 31 was 88 million pounds, about 43 percent below net debt of 154.3 million pounds at the same time last year.

The company said its order book at Oct. 31 stood at 593.0 million pounds compared with 569.6 million pounds a year earlier.

Chemring said on a constant currency basis, its order book had declined year over year, but did not quantify the fall.

The company secured an ammunition contract in the Middle East in April after several delays that had forced it to warn on profit last year.

Chemring said on Monday that it had accounted for the contract in its order book last year, which skewed its year on year comparison.

The company also said currency translation effects would help it post full-year results a little above market expectations.

Reporting by Vidya L Nathan in Bengaluru; Editing by Gopakumar Warrier and Sunil Nair

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