Chemring Holds Steady on FY26 Forecast as Order Book Hits £1.364bn

Chemring Group PLC (LSE:CHG) reaffirmed its outlook for the fiscal year 2026, buoyed by a modest climb in order cover from 76% in October 2025 to 85% as of late January 2026. The company's order book crept up 1% to £1.364bn, signaling steady demand despite some quarter-on-quarter fluctuations.

The first quarter order intake dropped significantly to £122 million, down 69% compared to the same period last year when Chemring benefited from several hefty multi-year contracts. However, the current order cover level surpasses last year's Q1 mark of 81%, providing a measure of comfort around near-term visibility.

Breaking down the segments, the Countermeasures and Energetics division edged up to 96% order cover for FY26, a slight improvement from 95% in October, though shy of the prior year's 98%. Meanwhile, the Sensors and Information division made gains too, lifting order cover to 52% from 45%, thanks largely to National Intelligence wins and recent contract awards like STORM contracts post-quarter.

Operational hiccups in countermeasures production, which had weighed on the company, appear to have been resolved, bolstering confidence in delivery timelines. With Energetics almost fully covered at 96%, the business seems to be operating on a firmer footing heading into the rest of the year.

Notably, Chemring's feasibility study in Norway has advanced into its second phase, with conclusions expected by year-end 2026. This signals ongoing exploration in new or expanded ventures, though the details remain under wraps for now.

Market consensus aligns closely with Chemring's guidance, forecasting revenue around £544 million, with adjusted EBIT near £80.7 million and earnings per share of 20.4p for fiscal 2026. The numbers suggest a steady but unspectacular trajectory.

While the drop in Q1 order intake might raise eyebrows, the company's overall backlog and segment-specific improvements hint at operational resilience. The mix of long-term contracts and resolution of production issues could set the stage for more stable delivery and cash flow over the coming months.

It will be interesting to see how Chemring navigates its current contract pipeline amidst these fluctuations and whether ongoing projects like Norway's study will pivot the firm toward new growth avenues-or simply maintain the status quo.