discoverIE Group PLC shares soared on Tuesday as its operating profit and margins increased despite a decline in revenue, as it said it was on track to deliver full year earnings in line with expectations.
The Guildford, Surrey-based customised electronics manufacturer and designer said revenue in the six months to the end of September fell 4.9% to £211.1 million from £222.0 million year-on-year. It said this was due to industrial destocking and the normalisation of supply chains.
Pretax profit also fell slightly, by 1.3% to £15.8 million from £16.0 million in the previous year.
However, underlying operating profit increased by 1.7% to £29.1 million from £28.6 million. The company said this represented 4% growth on a constant exchange rate basis. The underlying operating margin increased to 13.8% from 12.9%.
discoverIE raised its interim dividend by 4.0% to 3.90 pence per share from 3.75 pence.
Shares in discoverIE were up 17% to 739.50 pence in London on Tuesday morning.
discoverIE hailed its ‘flexible operating model’ which allows it control costs and offset lower sales.
It said third quarter trading is in line with expectations with the orders run rate ahead of sales and ahead of the second quarter.
The company also said it is on track to deliver full year underlying earnings in line with the board’s expectations.
Chief Executive Nick Jefferies said: ‘discoverIE delivered a resilient first half performance...Our flexible operating model allows us to control costs in response to lower production volumes, which along with ongoing efficiency initiatives and accretive acquisitions, has more than offset lower sales. This is a great strength of the business that has delivered improved underlying operating profits and margins in each of the last ten years (in-line in the Covid year).’
We remain focused on generating above-market growth through the cycle and our design win pipeline remains strong. This, along with our acquisition opportunities, is our engine for growth and we remain on track to deliver full year underlying earnings in line with the board’s expectations,‘ he said.
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