Industrial parts supplier Diploma eyes more deals amid double-digit profit growth
Technical components firm Diploma’s shares fell this morning despite double-digit growth in both profit and revenue in the first half of its financial year, as it noted a slowdown in its key industrial seals market.
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The figures
Profit before tax grew 13 per cent to £40.1m in the six months ending 31 March, while revenue grew 11 per cent to £260.4m.
Free cash flow declined 21 per cent to £14m, while earnings per share rose 15 per cent to 26.4p.
Interim dividend per share was up 10 per cent to 8.5p.
Shares fell 1.3 per cent today.
Why it's interesting
The firm said it was “optimistic” about the next six months, saying it is on track to meet its full-year guidance, but there were “early signs of slower activity in the industrial seals markets”, which account for around 39 per cent of the firm’s revenue.
Diploma also said it hoped to grow through acquisitions as the year goes on, after picking up three businesses last year: Clarendon Specialty Fasteners, which supplies seals to the aerospace and defence sectors, FS Cables, which sells electrical and communications cables within the UK, and Gremtek, which makes sleeves for electrical insulation and thermal and mechanical protection.
Diploma appointed chief executive Johnny Thomson in January.
What Diploma said
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Thomson said: “Diploma has delivered another good performance in line with our expectations. Despite macroeconomic uncertainties, the group remains on track to deliver good growth in revenues with modest margin progression for the full year.
“Acquisitions remain an integral part of the group’s growth strategy and although opportunities are very competitive, we remain optimistic about acquiring some quality businesses as the year progresses."