Discoverie reiterates full-year targets, shares jump
Discoverie Group said it was on track to meet full-year earnings on Tuesday following a "resilient" first half, sending the shares higher.
Discoverie Group
714.00p
12:40 24/12/24
Electronic & Electrical Equipment
10,090.79
12:54 24/12/24
FTSE 250
20,571.51
13:00 24/12/24
FTSE 350
4,491.87
12:54 24/12/24
FTSE All-Share
4,449.61
13:14 24/12/24
The FTSE 250 firm, which designs and manufacturers customised electronic components, reported a 5% decline in interim revenues to £211.1m. Underlying pre-tax profits fell 5% to £23.8m.
Discoverie attributed the fall to industry de-stocking and lead-time normalisation. It also noted that underlying operating profits improved 2% to £29.1m, as its flexible operating structure and efficiencies helped offset lower sales.
The company said there had been "record" design wins, with "significant" further opportunities looking forward. The order book stood at £163m as at 30 September,
Nick Jefferies, chief executive, said: "Discoverie delivered a resilient first half performance… with growth in operating margins to 13.8% - ahead of our near-term target - and excellent cashflow.
"This was in an environment of supply chain lead times returning to normal, and widespread customer inventory reductions."
Looking ahead, he said: "Third-quarter trading to date is in-line with our expectations, with orders run rate ahead of sales and ahead of the second quarter.
"We remain focused on generating above-market growth through the cycle, and our design win pipeline remains strong. This, along with our acquisition opportunities, is our engine for growth and we remain on track to deliver full-year underlying earnings in line with the board’s expectations."
As at 0945 GMT, shares in the Surrey-based firm had put on 15% to 731p.
Upgrading its rating to ‘hold’ from ‘sell’, Shore Capital said: "We lower our revenue forecast for the 2025 full year by 2%, with third-quarter sales still strong organically year-on-year, but maintain our profit forecasts.
"We see less risk of a profit downgrade for the 2025 full-year following a strong margin improvement in the first half and guidance of a further uplift for the full year."
It concluded: "Discoverie is well-placed to benefit from a range of long-term trends, including increased electrification in industrial applications and rail transportation, increased investment in renewable energy and an increase in AI and sensing in the medical sector.
"However, we believe these exposures are captured in the equity rating and see more upside elsewhere."