discoverIE Group PLC sees full-year profit ahead of expectations on continued strong order growth

Orders soared by 64% in the first six months compared with last year and were 34% higher than two years ago, before the pandemic

discoverIE Group PLC expects continued strong order growth to deliver full-year profits ahead of its previous forecast, despite supply chain and forex headwinds.

The designer and manufacturer of customised electronics to industry said its revenue and profit have recovered from the pandemic and are now well ahead of the pre-COVID-19 period.

Underlying operating profit from continued operations amounted to £18mln in the six months to 30 September 2021, a rise of 32% on last year and 27% higher than in the first half of pre-pandemic 2019/20.

Underlying pre-tax profits of 16.1mln were 38% higher than last year and 34% up on two years ago.

EPS from continuing operations rose to 13p per share from 9.5p last year.

The operating margin increased to 10.3% and discoverIE said it has raised its margin target to 13.5%.

Revenue jumped by 21% year-on-year to 174.3mln and was 17% higher than the pre-COVID period two years ago.

The company said its four focus target markets of renewable energy, medical, transportation, and industrial & connectivity accounted for 77% of sales.

“These markets are expected to drive the group’s organic revenue growth well ahead of GDP over the economic cycle and create acquisition opportunities,” discoverIE said.

Orders soared by 64% compared with 2020/21 and increased by 34% from 2019/20.

The order book stood at a record £198mln at the end of September, 71% above September 2020 and 54% higher than the same month in 2019.

The interim dividend was increased to 3.35p per share from 3.15p.

Chief executive Nick Jefferies said: “The second half has started well with continued order and sales growth over the same period last year and two years ago, and the group is on track to deliver full-year underlying earnings for the continuing operations ahead of the board’s previous expectations despite ongoing supply chain and foreign exchange headwinds.”

The sale of Acal BFi earlier this month marked the group’s final exit from the distribution business and it is now a solely focused global designer and manufacturer of customised electronics.

“We have raised our medium-term strategic targets accordingly and our continuing focus is on achieving organic growth with new design wins in sustainable target markets, together with accretive acquisitions,” said Jefferies.

“With a clear strategy focused on long-term, high quality, structural growth markets across Europe, North America and Asia, a diversified customer base, a record order book and a strong pipeline of acquisition opportunities, the group is well positioned to make further progress on its key priorities.”

READ: The voyage of discoverIE … back on course and full steam ahead

In the first half, free cash conversion was strong at 95% of profit after tax, ahead of the 85% target.

Net debt at 30 September 2021 was £75.6mln compared with £47.2mln at end-March.

Shares jumped 3.58% to 1,012.00p in opening trade.