Gooch & Housego’s (GHH) half-year figures were in line with consensus, with profits boosted by revenue growth at the aerospace and defence (A&D) segment, up a third to £18.1m. That rise was partly aided by last year’s acquisition of StingRay Optics, although beyond deal-making the photonics (light sciences) specialist continued its climb up the value chain, a management objective that is being helped by optimising manufacturing processes.
The drive to increase unit profitability was also reflected in a surge in the underlying margin at the A&D segment, from 7.3 to 11.4 per cent, although the outstanding products in this regard are components for microelectronics applications. That isn’t immediately obvious as they fall within the industrials segment, which saw a 2.5 percentage decline in the underlying margin. This was primarily due to timing issues on orders, specifically in relation to fibre couplers, held in check due to delayed work schedules on subsea cable programmes.
There was an appreciable step up in orders for these high-margin components in the corresponding period in 2017, but G&H closed out the period with a record order book, and a significant working capital outlay to build capacity ahead of a ramp up in forecast demand.
Broker finnCap forecasts adjusted pre-tax profit of £18.5m and EPS of 56.4p for the September 2018 year-end, against £16.1m and 48.5p in FY2017.
GOOCH & HOUSEGO (GHH) | ||||
ORD PRICE: | 1,345p | MARKET VALUE: | £330m | |
TOUCH: | 1,325-1,345p | 12-MONTH HIGH: | 1,540p | LOW: 1,230p |
DIVIDEND YIELD: | 0.8% | PE RATIO: | 33 | |
NET ASSET VALUE: | 408p* | NET CASH: | £5m |
Half-year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2017 | 52.2 | 4.90 | 14.1 | 3.7 |
2018 | 55.6 | 5.69 | 18.6 | 4.2 |
% change | +7 | +16 | +32 | +14 |
Ex-div: | 21 Jun | |||
Payment: | 27 Jul | |||
*Includes intangible assets of £38.9m, or 159p a share |