Is Chemring Group (LON: CHG) becoming a core UK defense growth play after FY25 results?

Chemring Group PLC (LON: CHG) has signaled a confident finish to FY25, reporting that adjusted operating profit will land in line with analyst expectations. With its order book swelling to approximately £1.3 billion by October 31, 2025, and key defense wins across the UK, U.S., Norway, and Australia, the defense technology firm continues to ride a post-conflict procurement wave.

Despite procurement delays from the UK government hitting its Sensors & Information division, investors appear to have taken solace in the strength of Chemring’s Energetics and Countermeasures segments. The London-listed company also confirmed that Alloy Surfaces, a U.S. unit struggling with declining Department of Defense demand, will be accounted for as a discontinued operation, with strategic options including sale or shutdown currently under review.

What does Chemring’s FY25 profit forecast tell investors about operational stability?

Chemring Group PLC expects to close the fiscal year with adjusted operating profit in line with consensus expectations, currently estimated at approximately £75.8 million. Adjusted earnings per share are likely to benefit from lower finance costs, which helped offset softness in some UK government orders. Operating margin is expected to expand to 14.7 percent, compared to 14.2 percent in FY24.

This uplift was primarily driven by the Energetics division, where rising demand for propellants and high-integrity energetic devices supported better-than-expected performance. The surge in defense restocking, particularly for NATO-aligned countries, has intensified interest in Chemring’s offerings as global militaries prioritize readiness over minimal stockpiles.

In contrast, Chemring’s Sensors & Information business faced continued delays in order placement from the UK Ministry of Defence and national security agencies. This drag was first flagged in the company’s interim results and remains a concern, but management believes the underlying pipeline remains intact.

Net debt as of the end of October stood at approximately £95 million.

What does Chemring Group’s share price trend in 2025 reveal about investor confidence and contract impact?

As of November 10, 2025, shares of Chemring Group PLC were trading at GBX 541, reflecting a modest 0.37 percent decline on the day. Despite this minor dip, the broader stock trajectory remains strongly positive, having rallied from a March 2025 low of under GBX 350 to highs above GBX 600 during the summer.

Trading activity has reflected growing institutional interest. Chemring’s inclusion in the FTSE 250 index has ensured consistent coverage and liquidity, with buy-side analysts maintaining a broadly positive outlook despite Alloy Surfaces-related impairments. The consensus is split between “buy” and “hold,” with limited downside risk seen at current levels due to the strength of order conversion and international diversification.

Analysts are also monitoring UK government spending patterns closely, with the expectation that delays in Sensors & Information orders could reverse following elections or defense budget finalizations in 2026.

Which contract wins are driving Chemring’s £1.3B order book and 2026 revenue visibility?

Chemring closed FY25 with an order book of approximately £1.3 billion, up from £1.0 billion a year earlier. The company secured £781 million in new orders during the fiscal year, representing a 21 percent increase over FY24. This growth was powered by a flurry of multi-year contracts in its Energetics and Countermeasures divisions.

In the U.S., Chemring Energetic Devices secured a five-year, USD 65 million sole-source framework contract for SCOT and JCAST tester systems. Initial base-year delivery orders are valued at USD 38 million. These testers are critical to global aircrew flight safety and will be manufactured at the company’s Downers Grove, Illinois facility through 2030.

In the UK, Chemring Energetics UK was awarded a £24 million follow-on order for rocket motors and critical components for the Next Generation Light Anti-Tank Weapon system (NLAW). This brings CEUK’s cumulative NLAW-related wins since March 2023 to £90 million. Additional orders are expected in early FY26. Work is being carried out at the company’s Ardeer site in Scotland.

Chemring Nobel in Norway secured a £23 million order from Nammo for HMX energetic products, with deliveries stretching over a decade to 2037.

Chemring Australia won a USD 35 million contract to produce airborne countermeasures for the Commonwealth of Australia, with deliveries scheduled to complete by October 2027. In the UK, Chemring Countermeasures UK secured a £15 million order from NATO’s procurement agency to supply airborne countermeasures for a European NATO country, with deliveries to take place in FY28 and FY29.

On the electronics and software side, Chemring’s Roke business landed over £40 million in national security renewals and won a £20 million contract for the British Army’s Project ZODIAC, a critical system within the Land ISTAR program. Roke is acting as the Prime Systems Integrator and began deliveries in late FY25, with further milestones expected across FY26 and into FY27.

What strategic moves are being made to realign Chemring’s business portfolio?

A major shift in Chemring’s portfolio is unfolding with the strategic review of Alloy Surfaces Company, its U.S.-based manufacturer of pyrophoric airborne decoys. The unit has seen declining orders from the U.S. Department of Defense over multiple years, making it unsustainable under current conditions. The company expects to report a £3 million loss from Alloy Surfaces in FY25 and will book roughly £5 million in associated cash charges.

Chemring is exploring a potential asset sale or wind-down and will report Alloy Surfaces under discontinued operations in its FY25 results. While the exit brings short-term financial drag, analysts view the move as a necessary step to sharpen Chemring’s focus on high-growth segments like Roke, Energetics, and next-generation defense technologies.

To that end, Chemring completed its acquisition of Landguard Group in August 2025. Based in Hampshire, Landguard builds software-defined radio systems and secure communication products for defense and law enforcement clients. The acquisition complements Roke’s offering and is expected to accelerate revenue synergies from FY26 onward.

How are institutional investors evaluating Chemring Group’s FY26 growth trajectory after the Alloy Surfaces exit and new contract wins?

Despite the drag from Alloy Surfaces and UK procurement uncertainty, sentiment around Chemring Group PLC remains positive. The company’s strategy of balancing long-cycle energetics contracts with shorter-cycle national security programs is paying off, and investors are closely watching the growth runway for Roke and CEUK.

Analysts anticipate further margin expansion in FY26 and expect order momentum to continue, especially given the geopolitical backdrop and NATO members’ increased defense budgets. The diversification across the U.S., UK, European, and Australian markets helps insulate Chemring from single-region shocks.

Chemring’s full-year FY25 results are due on December 9, 2025. Market participants expect the update to include more clarity on Sensors & Information revenue, discontinued operations impact, and FY26 order trends. Depending on the UK government’s fiscal decisions, a short-term reacceleration in Roke’s domestic orders could serve as a near-term catalyst.

Key takeaways from Chemring Group PLC’s FY25 trading update and contract pipeline

• Chemring Group PLC expects FY25 adjusted operating profit to land within consensus, supported by an uplift in Energetics margin and stable EPS due to lower finance costs.
• The total order book rose to £1.3 billion, up from £1.0 billion a year ago, with order intake climbing to £781 million, reflecting strong contract momentum in international defense markets.
• Chemring Energetic Devices secured a USD 65 million framework contract, while Chemring Energetics UK added a £24 million follow-on NLAW order, continuing its run of multi-year wins.
• Chemring Australia and Chemring Countermeasures UK booked major countermeasures orders worth USD 35 million and £15 million respectively, enhancing regional diversification.
• The Sensors & Information division remains pressured by UK government delays, though Roke’s £20 million Project ZODIAC win and £40 million in renewals signal longer-term growth stability.
• Alloy Surfaces Company will be treated as a discontinued operation, with Chemring reviewing options including an asset sale following persistent U.S. defense order declines.
• The acquisition of Landguard Group enhances Chemring’s software-defined radio and secure communications capabilities, aligning with Roke’s platform strategy.
• CHG shares closed at GBX 541 on November 10, showing resilience amid transition, with institutional sentiment holding a cautiously bullish stance into the December 9 earnings date.