Oxford Instruments stays in tune

The supplier of products for industrial and research-focused customers continued to embed its ‘Horizon’ strategy across the company, which it has rolled out over the past two years. Oxford spent £25.4m on research and development, with a focus on products and technologies that offer “new capabilities”. The strategy has cut into adjusted operating margins, which slid from 15.7 per cent in FY2018 to 14.9 per cent, a trend that management wants to address this year. But the company, whose US-based atomic microscopy business exports “around $10m (£7.9m)-worth to China”, expects to reckon with approximately £1m of tariffs emanating from the US-Chinese trade dispute.

Oxford is committed to reducing its working capital, which it took down by £3.7m, reflecting a boost in inventories of £4m and receivables of £3.5m, respectively, along with payables and customer deposits increasing by £4.1m and £7.1m. Management is keen to reduce the day sales inventory ratio, primarily through reducing its roster of suppliers and consolidating its remaining suppliers.

Analysts at JPMorgan have revised their forecast adjusted EPS up from 63.9p to 67.5p for the March 2020 year-end, rising to 70.1p in FY2021.