Gooch & Housego reports sharp fall in H1 profits

Gooch & Housego shares were under pressure on Tuesday after the AIM-listed manufacturer reported a sharp drop in profits in its first half – though full-year guidance was unchanged.

The company, which specialises in optical components and systems, reported a 1.4% decline in revenues to £63.6m in the six months to 31 March, down 5.3% on an organic, constant-currency basis.

Strong growth in Aerospace & Defence was outweighed by a moderate drop in Life Sciences sales and a heavy fall in turnover at its Industrial division – which accounts for around half of group sales. Continuing operations sales in Industrial dropped 13.1% to £31.7m, as a result of customer destocking in industrial laser markets as well as lower revenues in the semiconductor market.

As a result, group adjusted pre-tax profits came in at just £2.6m, down from £4.7m the year before.

Nevertheless, the company said its expectations for the full year remain unchanged, with the order book holding steady at £115.8m. Execution risks to the second half "remain but have been reduced", it said.

"Despite the reduced demand in our industrial and medical laser markets persisting longer than expected, the medium term outlook remains positive underpinned by a strong order book and healthy pipeline with the group well positioned to benefit from increased demand levels as a result of operational and supply chain improvements," said chief executive Charlie Peppiatt.

"The market dynamics for G&H's technologies and capabilities remains strong in all our target sectors supported by the focused progress the group has made to establish the foundations to accelerate the delivery of our strategy."

The stock was down nearly 5% at 547p by 1348 BST.