Diploma delivers 'strong' Q3 performance, reiterates FY guidance

Technical products and services group Diploma said on Thursday that it has delivered a "strong" third-quarter performance, leaving the company confident in meeting its full-year guidance.

Diploma said its third-quarter performance had remained strong, with organic growth of 13% as it continues to focus on revenue diversification activity in order to drive growth, build scale and increase resilience.

For the first nine months of Diploma's trading year, organic growth was up 15%, driven by our organic revenue initiatives, while reported revenue growth was 26%, reflecting a positive contribution from high-quality acquisitions and a roughly 2% foreign exchange tailwind.

The FTSE 250-listed also noted that the "strategically important" acquisitions of R&G Fluid Power Group and Accuscience would both accelerate future organic growth in its key business lines.

Diploma added that its full-year guidance for low double-digit organic revenue growth, reported revenue growth of over 20%, an operating margin at the top end of its 18-19% guidance range, and a net debt/EBITDA ratio of approximately 1.5x by year-end all remained unchanged.

"Our operating margin performance continues to be strong, demonstrating the power of our value-added service model which drives customer loyalty and pricing power. We continue to successfully manage supply chain pressures, tight labour markets, and inflation," said Diploma.

"Whilst the wider macroeconomic outlook is uncertain, the Group's resilience is supported by our increasing revenue diversification, our value-added model, and strong cash generation and balance sheet. We remain focused on executing our strategy of building high-quality, scalable businesses for organic growth and are confident in our long-term prospects."

As of 1040 BST, Diploma shares were up 4.22% at 2,668.0p.

Reporting by Iain Gilbert at Sharecast.com