Chemring boosted by pound weakness

Chemring Group plc (LON:CHG) have seen a £103 million boost to revenue, after benefiting from the recent weakness of the pound.

The British defence contractor, which operates on an international basis and primarily through the dollar currency, has benefited from pound fluctuations in the foreign exchange markets.

In a pre-close statement, the company revealed that annual revenue was up by £477 million, from the £100 million of the same period a year previously. £37 million of the profit was attributed directly to foreign exchange gains in recent months.

The additional profit boost was due to comprehensive cost-saving exercises initiated last year by the company. At the start of the year, chief executive Mike Flowers announced measures to revive main-market business. These included a dividend cut in order to reduce the debt acquired from a delay in a major contract in the Middle East.

In addition, the election of Donald Trump as of November 8th has also provided anticipatory boosts for the company.

Analyst Ben Bourne said in comments to the Telegraph:

“Trump’s election promises of a beefed-up US military and increased pressure on NATO allies to increase their own defence spending has caused defence stocks to rally on both sides of the Atlantic.

“We see the pro-defence stance of the president-elect… as ultimately positive for US defence spending. If Mr Trump’s threats of withdrawing American support for lagging Allies are taken seriously, we expect to see increases in planned and emergency defence spending in Europe as the shadow of an emboldened Russia encroaches the continent.”

Chemring Group is a UK company that which manufacturers defense and security related products such as ejector seats and flares which are used to counter-act against heat-missiles. The company was first listed on the stock-exchange as of 1974.

Shares in the company were up by 2.8 percent at 160.50 p on Monday morning on the London stock exchange.