Defence measures

UK defence countermeasures and pyrotechnics group Chemring, has further boosted its international profile with three acquisitions.

In a bid to consolidate what it claims is currently a fragmented market, the Hampshire company announced that it has agreed to buy Technical Ordnance, Leafield Engineering and Leafield Marine, all of which manufacture explosive devices for the defence and aerospace sectors.

US-based Technical Ordnance, which last year made a profit of just under £5m, has a range of major customers including all three main US military services. It will cost Chemring just over £39m.

According to the UK group, Technical Ordnance also offers potential for growth two ways; through the transfer of products and technologies to address the huge US defence market, and by using Chemring’s customer network to increase export potential.

The decision to buy both Leafield companies for £5m was driven by Chemring’s similar aspirations to grow in Europe, where the acquisitions will open doors in the complex weapon market and substantially enhance the firm’s electro-mechanical and sub-system engineering capability, said Chemring. Leafield’s integration within Chemring’s broader energetic materials capability should provide opportunities for organic growth, the company added.

Dr David Price, Chemring’s chief executive, said: ‘The acquisitions will dramatically increase the scale and capability of our Energetics division, and will provide a more balanced business model for the group. The companies are an excellent fit with our existing businesses, and should offer substantial opportunities for future growth.’

Unveiling its year-end financial results, the company said that the outlook for the countermeasures business continues to remain positive. In 2005, the global market (now estimated to be worth £180m) increased by 12 per cent, primarily driven by requirements from the US. In the next three years this is expected to grow, especially with demand from the US Army and Navy for special material decoys.

This trend was demonstrated recently when the company signed a memorandum of understanding with the US Department of Defence for the expansion of manufacturing capacity in Philadelphia to meet demand for one of its special material decoys for US Army helicopters. Production will increase from 20,000 to 80,000 units a month.

Even allowing for a £2.5m loss in its marine division, Chemring still boasts record orders of £160m following a 32 per cent increase in forward business by the year end. Overall profit before tax was up eight per cent to £14.3m.