Challenging laser market hits Gooch & Housego profits

The AIM-traded firm said its adjusted profit before tax was down 19.9% for the 12 months ended 30 September, however, to £15m, while its adjusted basic earnings per share slid 18.2% to 46.8p.

On a statutory basis, its profit before tax was off 40.6% at £6m and its basic earnings per share tumbled 48.5% to 15.1p.

The board still declared a total dividend per share of 11.5p, up 1.8% year-on-year, and confirmed its net debt had grown £3.7m through the year, to £14.3m.

On the operational front, Gooch & Housego said a challenging macroeconomic environment had continued in its industrial laser sector, which was contrasted with record levels of demand for fibre optics, hi-reliability fibre couplers used in undersea cables and life science products.

In its industrial laser products unit, the board said it believed technical innovation in uts end markets and new laser-based manufacturing techniques, combined with its “market leading position”, would ultimately drive improved demand.

During the year, it made strategic investments in order to deliver a multi-year growth phase of hi-reliability fibre couplers and new US A&D contracts.

Further investment was also made in research and development projects that the company thought represented the highest potential for its photonics technologies.

In life science, Gooch & Housego said it more than doubled that unit in size compared with the prior year, driven by growth in its existing market areas, which was “strongly supported” by the addition of ITL, which had performed ahead of expectations since its acquisition in August 2018.

Looking at its strategic priorities, the firm said it had made “considerable progress” with further diversification and moving up the value chain, in large part due to the continued growth in its A&D and life science business.

“Trading reflected a challenging macro-economic environment for industrial lasers and in contrast record demand for fibre optics, hi-reliability fibre couplers used in undersea cables and life science products,” said chief executive officer Mark Webster.

“We believe that ultimately technological innovation in industrial laser end market applications and new laser based manufacturing techniques will drive improved demand for our industrial laser products.

“During the year we invested in manufacturing capacity for areas of high growth such as hi-reliability fibre couplers and in R&D projects that represent the highest return for our photonic technologies.”

Webster added that “considerable progress” had been made on the company’s strategic goals of further diversification and moving up the value chain, with life sciences more than doubling compared with last year.

“Our order book reflects strong demand for fibre optics, hi-reliability fibre couplers and our A&D and life science capabilities, with industrial laser demand yet to recover to more ‘normalised’ levels.

“G&H's forecasts and plans are not dependent on an industrial laser recovery.

“The board is confident the company is well positioned to deliver progress in the 2020 financial year and beyond.”

At 1303 GMT, shares in Gooch & Housego were down 2.99% at 1,215p.