Acquisitions and a recovery in the US have helped boost specialist distributor, Diploma's first-half figures. What's more, management sound confident of further progress in the second half – leaving scope for further share price upside.
Robust US infrastructure spending meant strong demand at Diploma's seals business and divisional revenue rose 28 per cent in the period to £48m, with the adjusted operating profit here having jumped from £6.6m to £9.9m. That helped drive the group's adjusted operating margin up by 1.2 percentage points to 20.8 per cent. The US business was also strengthened by December's acquisition of J Royal and, overall, the group spent £15.5m on acquisitions in the half, following on from the £27.4m spent on deal-doing in 2011's first half. Meanwhile, the life sciences and controls businesses also reported solid trading – the life science operating profit rose 8 per cent to £9.3m, while the controls operating profit grew 4 per cent to £7.2m.
Broker Panmure Gordon expects to upgrade its full-year estimates by about 5 per cent – they currently stand at £51.5m of pre-tax profit and EPS of 32p.
DIPLOMA (DPLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 447p | MARKET VALUE: | £506m | |
| TOUCH: | 447-450p | 12-MONTH HIGH: | 465p | LOW: 277p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 138p* | NET DEBT: | 2% | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 113 | 19.3 | 11.2 | 3.5 |
| 2012 | 127 | 23.3 | 13.9 | 4.2 |
| % change | +13 | +21 | +24 | +20 |
Ex-div: 25 May Payment: 20 Jun *Includes intangible assets of £110m, or 97p per share | ||||
