Chemring, a UK-based specialist in military explosives and electronic warfare, has announced an unprecedented surge in demand for rearmament, resulting in a record order book.

Although Chemring’s share price has been slower to rise compared to other defense firms, it has experienced significant growth recently, increasing by 75% since February. On Tuesday, shares jumped by 6.7%, reaching a 14-year high of 519p.

In its latest financial report covering the first half of the fiscal year ending in April, Chemring indicated a 42% year-on-year increase in order intake to £488 million, elevating the total order book to £1.3 billion—a 25% increase compared to the same period last year.

The company is optimistic about the recent strategic defense reviews, underpinned by the UK government’s commitment to elevate defense spending to 2.5% of GDP by 2027 and to 3% in the subsequent parliament.

However, Chemring noted that orders have been slow in its sensors and electronics division, which represents 40% of its total business. This slowdown was attributed to a pause at the Ministry of Defence prior to the strategic review.

In contrast, there is a significant boom in its “energetics and countermeasures” segment. This division has benefited from various contracts, including orders from Germany for ammunition, from Switzerland for high explosives, and for components produced in Scotland for the next generation of shoulder-fired anti-tank missiles. In the United States, Chemring’s involvement in a classified missile system has also provided a boost to its business.

Regarding the strategic defense reviews in the UK and the EU, Chemring expressed that these developments will aid its aspirations to achieve an annual turnover of £1 billion. The firm stated: “As European countries increasingly take responsibility for their security, they seek to enhance their dependence on local defense contractors.”

It continued, “The recently established UK-EU security and defense partnership may open pathways for UK companies to access rearmament funds through the Security Action for Europe initiative.”

Moreover, the company highlighted that the UK defense landscape is undergoing substantial reforms to improve national security while enhancing the country’s global standing.

“The UK strategic defense review outlines a transformative plan for the next ten years aimed at fortifying national security and ensuring a robust defense framework, which is supported by a bipartisan governmental commitment to progressively increase defense spending, potentially creating growth and investment opportunities for Chemring,” the statement added.

Nearly half of Chemring’s business is generated from the UK, with another 36% stemming from the US, while the remaining portion comes from Europe and elsewhere.

During the six-month period, pre-tax profits increased by 6% to £24 million, with revenues rising 5% to £234 million. Although net debt rose by 24% to £93 million, the company indicated that this was primarily due to investments related to growth. The interim dividend has been raised by 0.1p to 2.7p.