When Dialight (DIA) published its full-year figures in February we thought it was too early to gauge whether its restructuring programme was having the desired effect. Six months on, with adjusted operating profit up 29 per cent to £5.4m in the reported period (excluding a favourable currency impact of £1.1m), there can be little doubt.
Chief executive Michael Sutsko and his team have been streamlining the production process. This has meant a simplification of product lines, and a reduction in the number of underlying components, as part of a move to a platform engineering model. This should help Dialight tap into the growth of the industrial LED market through an enhanced ability to match specific customer product requirements. It should also reduce inventory levels, thereby freeing up capital. Operating cash flow, prior to working capital movements, was well up on the 2016 half year, with inventories decreasing by £4.1m, against an increase of £3m in the corresponding period.
The production transfer, as part of the outsourced manufacturing partnership with Sanmina Corp, will be completed by the end of the year. This transition has taken slightly longer than expected, leading to some disruption and will entail a brief period of dual running costs.
Analysts at N+1 Singer expect adjusted pre-tax profit of £19.5m and EPS of 38.7p for the year to December 2017, compared with £12.6m and 26.7p in 2016.
| DIALIGHT (DIA) | ||||
| ORD PRICE: | 990p | MARKET VALUE: | £322m | |
| TOUCH: | 989-990p | 12-MONTH HIGH: | 1,115p | LOW: 535p |
| DIVIDEND YIELD: | nil | PE RATIO: | 71 | |
| NET ASSET VALUE: | 242p* | NET CASH: | £12.7m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 79.8 | -7.1 | -14.4 | nil |
| 2017 | 92.7 | 4.0 | 8.0 | nil |
| % change | +16 | - | - | - |
| Ex-div: | - | |||
| Payment: | - | |||
| *Includes intangible assets of £15.2m, or 47p a share | ||||
