Strong demand drives first-half growth for Oxford Instruments

Oxford Instruments said on Tuesday that “strong” demand in its first half drove growth across the period, with orders up 18.7% year-on-year, or 13% at constant currency.

The FTSE 250 company said its revenue for the six months ended 30 September was 10.2% higher than the same time last year at constant currency at £200.5m, even though it was “partially constrained” by supply chain disruption and export licence delays.

Adjusted operating profit was 4.6% firmer at constant exchange rates at £36.8m, while its operating profit margin improved slightly to 18.4% from 18%.

Its reported order book totalled £315.7m at period end, which was 28.7% higher than last year at constant currency, while a currency tailwind supported the strong growth in adjusted operating profit.

Net cash increased to £97.1m from £70.1m, despite an increase in inventories to support growth and to mitigate supply chain disruption, as well as deferred shipments due to export licence delays, resulting in normalised cash conversion of 65%.

The board hiked the interim dividend by 4.5%, and will pay shareholders 4.6p per share for the half-year.

“The group has continued to deliver strong growth momentum despite the challenging external landscape,” said chief executive officer Ian Barkshire.

“Our purpose - to enable a greener, healthier, more connected advanced society - together with our customer-centric, market-focused strategy, is driving increasing demand from structural growth markets for our world-class solutions.

“Our pipeline remains robust across all our end markets.”

Barkshire said the firm expected higher production in the second half, combined with a positive impact of recent price increases as it converted its record order book.

“This provides good visibility for an expected improvement in trading in the second half, with full-year trading at constant currency remaining in line with expectations.

“While mindful of the increasingly uncertain macroeconomic and geopolitical landscape, our record order book demonstrates our positive trajectory and underpins our confidence in the future growth potential of the group.

“Our strong balance sheet positions us well to invest in the business and consider further acquisitions, and we continue to selectively review a pipeline of acquisition opportunities.”

At 0904 GMT, shares in Oxford Instruments were up 2.63% at 2,030p.

Reporting by Josh White for Sharecast.com.