Reported half-year revenues for Oxford Instruments (OXIG) benefited from foreign exchange translation effects. A 6.9 per cent contraction at constant currencies points to challenges in both the technology tools company's European and North American markets, while adjusted group profits were down 3.7 per cent on the 2015 comparative. Working capital outflows also bumped up net debt for the high-tech toolmaker by around £13m from six months earlier.
Nonetheless, Oxford's market valuation was relatively untroubled on release of the figures, with good news including a 5 per cent constant-currency increase in the order book, together with a marked rise in profitability at the highly promising nanotechnology tools segment. With one eye to the future, management has stepped up research and development spending by 12 per cent to £15.1m.
The nanotechnology result sweetened the pill to an extent, although slackening demand for healthcare products and ongoing weakness in superconducting wire sales are expected to constrict full-year profits. Oxford's superconducting wire business is reliant on a relatively small number of magnetic resonance imaging manufacturers as customers, so patchy revenue streams are perhaps unavoidable.
N+1 Singer expects revenues of £381m for the March 2017 year-end, together with EPS of 51.5p, rising to £390m and 56.4p in the following year (up from £362m and 49.1p in FY2016).
| OXFORD INSTRUMENTS (OXIG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 633p | MARKET VALUE: | £362m | |
| TOUCH: | 632-639p | 12-MONTH HIGH: | 804p | LOW: 558p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 66 | |
| NET ASSET VALUE: | 240p* | NET DEBT: | 103% | |
| Half-year to 30 Sept | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 165 | 6.1 | 5.3 | 3.7 |
| 2016 | 172 | -0.5 | -1.2 | 3.7 |
| % change | +4 | - | - | - |
Ex-div: 9 Mar Payment: 7 Apr *Includes intangible assets of £221m, or 385p a share. | ||||
