MARKET REPORT: Global defence spending splurge boosts Chemring

Chemring had its best day in the stock market in more than a year as it cashed in on increased defense spending around the world.

The FTSE 250 company, which makes military explosives and technology to launch missiles and satellites into orbit, reported booming demand for its wares.

The order book – a measure of pipeline orders to be delivered over the coming months and years – rose 54 per cent to £749.5 million in the six months to the end of April.

That was the strongest level in ten years. Shares rose 9.1 percent, or 24.5 pence, to 293 pence.

That was the biggest one-day rise in the share price since late February last year, when the stock rose 13.4 percent after Germany pledged to increase its military spending in the wake of Russia’s invasion of Ukraine.

Chemring recorded slightly lower sales and profit compared to the same period a year earlier.

It said this was due to some order delays in the second half of last year, which now came through.

Chemring boss Michael Ord said the past six months have been a “period of heightened activity” as the group adjusted to “changing customer spending priorities.”

He added: “The outlook for the global defense market is increasingly positive, with strong growth forecast for the next decade.”

Stifel analyst Annabel Hewson said Chemring is “very well positioned, especially in the US and UK markets, with its technological strength and some source positions.”

She added: ‘Chemring has shown us that it can handle larger contract work and provide estimates if successful again.’

The FTSE 100 rose 0.4 percent, or 28.11 points, to 7628.1 and the FTSE 250 gained 0.5 percent, or 103.67 points, to 19217.22.

Oil prices fell 1.15 percent to $76.40 a barrel on fears of weaker demand and a recession in the US.

Analysts from investment bank Citi said Saudi Arabia’s production cuts are unlikely to push oil prices above $80. BP fell 0.4 percent, or 1.7p, to 471.25p and Shell lost 0.5 percent, or 11.5p, to 2273.5p.

GSK rose after the US Food and Drug Administration accepted an initial application for its cancer drug, Jemperli, in combination with chemotherapy to treat adult patients with certain types of endometrial cancer.

Shares in the pharmaceutical giant rose 0.7 percent, or 9.4 pence, to 1391.4 p.

The reshuffling of the boardrooms at Unilever showed little sign of slowing down as the maker of Marmite and Magnum entered the recruiting market in search of a chairman.

The consumer goods group hired executive search firm Spencer Stuart to find a replacement for its chairman Nils Andersen, Bloomberg reported.

He has been in office since 2019, but will serve nine years on the board by next year’s AGM and is unlikely to be re-elected.

Unilever said last week that chief financial officer Graeme Pitkethly would retire at the end of May. Shares fell 0.7 percent, or 26.5p, to 4044.5p.

It was a positive session for Zotefoams after the group, which has been making the soles of Nike’s high-performance footwear since December 2017, extended its contract with the US sports giant until the end of December 2029. Shares rose 3.8 percent, or 13 pence. to 354 p.

Dr. Martens went the other way. The shoemaker lost 1 percent, or 1.4 pence, to 132.7 pence after Peel Hunt downgraded its rating from “add” to “hold” and cut its target price from 250 pence to 150 pence.

Asos fell 5.1 percent, or 19.2 pence, to 356 pence after Berenberg and Credit Suisse lowered the fast fashion company’s target price.

It came as Mike Ashley’s Frasers Group (0.2 percent, or 1.5 pence, to 696 pence), which owns Sports Direct, Jack Wills and Flannels, increased its stake in Asos from 7.4 percent to 8 .8 percent.