Shares in specialist distributor Diploma (DPLM) slipped 3 per cent on the day these half-year figures appeared after revealing margin pressure and weak European trading conditions. Moreover, further growth through acquisitions may take time - management believes that current market uncertainty is delaying the closure of deals.
At the divisional level, the seals business - which provides hydraulics-related parts for heavy machinery - saw revenue remain roughly flat at £50.5m (after adjusting for currency effects and acquisitions). But operating profit fell 8 per cent to £9.1m - with the operating margin down 260 basis points to 18 per cent - reflecting investment and an inability to fully pass on supplier costs to customers. The controls division, meanwhile, saw adjusted revenue fall 5 per cent to £42.5m, and operating profit fell 4 per cent to £6.9m - partly due to lower demand from Formula One-related businesses. Still, revenue at the life science unit - which provides consumables to hospitals and pathology laboratories - grew 18 per cent to £46.7m, helped by last June's acquisition of DSL. That unit's operating profit rose 18 per cent to £11m on roughly stable profit margins. Overall, however, the group operating margin slipped from 20.8 per cent to 19.3 per cent.
Broker Panmure Gordon expects adjusted full-year pre-tax profit of £57m, giving EPS of 36p (from 33.1p in 2012).
DIPLOMA (DPLM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 580p | MARKET VALUE: | £657m | |
| TOUCH: | 580-585p | 12-MONTH HIGH: | 638p | LOW: 405p |
| DIVIDEND YIELD: | 2.6% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 157p* | NET CASH: | £7.3m | |
| Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 127 | 23.3 | 13.9 | 4.2 |
| 2013 | 140 | 23.8 | 14.7 | 5.0 |
| % change | +10 | +2 | +6 | +19 |
Ex-div: 22 May Payment: 19 Jun *Includes intangible assets of £115m, or 102p a share | ||||
