Chemring Group

Website: Chemring Group
Index: FTSE 250
EPIC: CHG
Supersector: Industrial Goods and Services
Sector: Aerospace and Defense
Subsector: Defense
Market Cap: £1.48B
Payout Frequency: Semi-Annual

Chemring Group Dividend Analysis and Summary

Headline dividend details

Final dividend: 5.3p per share (FY24: 5.2p)
Total FY25 dividend: 8.0p per share (up 3% vs 7.8p)
Payment date: 10/04/2026
Record date: 20/03/2026
Ex-dividend date: 19/03/2026
Estimated cash outflow for final dividend: ~£14.5m
Policy/cover: Target cover ~2.5x underlying EPS; FY25 underlying EPS of 19.4p (diluted) / 19.8p (basic) implies cover of ~2.4–2.5x and payout ratio ~40%

Financial support for the dividend

Profitability: Underlying operating profit up 6% to £73.5m; underlying diluted EPS up 3% to 19.4p.
Cash generation: Underlying cash conversion at 114% (36-month average 101%); FY26 guidance of 80–85% as capex rises.
Balance sheet: Net debt £89.0m, leverage ~0.90x EBITDA; ample liquidity with £134.7m undrawn facilities and strong covenant headroom (interest cover 12.17x).
Visibility: Record order book £1,345m; FY26 revenue already ~76% covered.

Sustainability and growth outlook

Policy alignment: The Board reiterates a growing and sustainable dividend covered ~2.5x by underlying EPS; FY25 delivery is in line.
Earnings support: Momentum in Countermeasures & Energetics (margin 19.1%) offsets near-term UK government delays in Sensors & Information; overall margins improved to 14.8%.
Cash and capex: Elevated FY26 capex (£100–110m gross, ~£15m grants) and higher finance charges temper near-term free cash flow but are tied to capacity expansions expected to add c.£100m revenue and c.£30m operating profit p.a. from 2028. This underpins medium-term dividend growth capacity.
Coverage resilience: Large, long-dated order book and 76% FY26 cover provide confidence in maintaining the dividend through FY26’s heavier investment phase.

Structural changes and capital allocation signals

M&A: Acquisition of Landguard Nexus (up to £20m) to enhance Roke (Sensors & Information).
Portfolio actions: EHD business sold; Alloy Surfaces held for sale/to be divested. Streamlining could modestly de-risk cashflows and focus capital on higher-return niches.
Capacity expansions: Ongoing multi-year investments in Norway, Scotland and Chicago; Norwegian project cost now expected at £180m gross with £90m grants, still expected to generate attractive returns.
Buyback: Ongoing share buyback up to £40m (spent £3.6m in FY25). This complements dividends and can enhance per-share growth.
Refinancing: RCF increased to £180m to Dec-2028 (extendable), plus £80m UKEF facility; supports capex without stressing leverage.

Risks and flags to dividend stability

Higher capex and finance costs in FY26 will lower free cash flow vs FY25; management guides to lower cash conversion (80–85%).
Sensors & Information saw short-term revenue softness from UK government delays; recovery expected H2-FY26 onward, but timing risk remains.
Net debt rising with investment (0.90x EBITDA) — still conservative, but continued discipline is needed if cost inflation persists (e.g., Norway project overrun).
Execution risk on large expansion projects and on divestment of Alloy Surfaces; delays could affect cash timing.
Defence budget timing and programme awards can shift, though the record order book and multi-year frameworks mitigate this.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
20/03/2025	11/04/2025	Final	5.20p	GBX
14/08/2025	05/09/2025	Interim	2.70p	GBX

Total (Annual Dividends Per Share): 7.90p

Dividend Yield = Annual Dividends Per Share (7.90p) ÷ Share Price (522p) = 1.51%

Ex Dividend Date	Payment Date	Type	Amount	Currency
19/03/2026	10/04/2026	Final	5.3000p	GBX
14/08/2025	05/09/2025	Interim	2.70p	GBX
20/03/2025	11/04/2025	Final	5.20p	GBX
15/08/2024	06/09/2024	Interim	2.60p	GBX
21/03/2024	12/04/2024	Final	4.60p	GBX
17/08/2023	08/09/2023	Interim	2.30p	GBX
23/03/2023	14/04/2023	Final	3.80p	GBX
18/08/2022	09/09/2022	Interim	1.90p	GBX
10/03/2022	31/03/2022	Final	3.20p	GBX
19/08/2021	10/09/2021	Interim	1.60p	GBX
01/04/2021	23/04/2021	Final	2.60p	GBX
20/08/2020	11/09/2020	Interim	1.30p	GBX
02/04/2020	24/04/2020	Final	2.40p	GBX
29/08/2019	13/09/2019	Interim	1.20p	GBX
04/04/2019	18/04/2019	Final	2.20p	GBX
30/08/2018	14/09/2018	Interim	1.10p	GBX
05/04/2018	20/04/2018	Final	2.00p	GBX
31/08/2017	15/09/2017	Interim	1.00p	GBX
27/04/2017	18/05/2017	Final	1.30p	GBX
03/09/2015	25/09/2015	Interim	2.40p	GBX
16/04/2015	08/05/2015	Final	1.70p	GBX
23/07/2014	15/08/2014	Interim	2.40p	GBX
16/04/2014	09/05/2014	Final	3.80p	GBX
24/07/2013	15/08/2013	Interim	3.40p	GBX

Year	Interim	Final	Currency	Total	Change
2024	2.600	5.200	GBX	7.800	13.040
2023	2.300	4.600	GBX	6.900	21.050
2022	1.900	3.800	GBX	5.700	-22.970
2021	1.600	5.800	GBX	7.400	100.000
2020	1.300	2.400	GBX	3.700	8.820
2019	1.200	2.200	GBX	3.400	9.670
2018	1.100	2.000	GBX	3.100	34.780
2017	1.000	1.300	GBX	2.300	-43.900
2015	2.400	1.700	GBX	4.100	-33.870
2014	2.400	3.800	GBX	6.200	82.350
2013	3.400		GBX	3.400

Number of Shares:

Payment	Paid	Amount
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