June 5, 2019 / 6:28 AM / 11 days ago

Chemring posts slightly higher profit, maintains forecast

(Reuters) - Defence contractor Chemring Group said its half-yearly profit rose 4% and backed its full-year forecast as it gained from faster insurance payouts for an explosion last year at its UK factory that makes flares to combat heat-seeking missiles.

The fatal blast in August left a scar on the firm’s costs and operations and continued to bite as it decided against reopening the explosion-hit unit amid an ongoing investigation.

“Significant changes have been implemented in the period to improve safety, strengthen leadership, corporate governance and embed continuous improvement across the Group,” Chief Executive Michael Ord said in a statement.

The company, which expects to book more than two-thirds of its 2019 revenue in the second half of the year, said its order book stood at 494 million pounds at April 30.

Defence contractors have benefited as nations pump more money into defence. Global military expenditure in 2018 reached levels not seen since the end of the Cold War, fuelled by the United States under President Donald Trump, according to a leading defence think-tank.

Last month, Chemring’s Australian unit was awarded two contracts by the U.S. Department of Defence to supply countermeasures to the Royal Australian Air Force, the U.S. Navy and the U.S. government’s Foreign Military Sales scheme in support of Lockheed Martin F-35 fighter jets.

The company’s underlying operating profit was 12.1 million pounds in the period ended April 30, compared with a restated 11.6 million pounds for the same period a year earlier.

Reporting by Yadarisa Shabong in Bengaluru, editing by Chris Peters and Saumyadeb Chakrabarty

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