TIDMGHH
RNS Number : 2403W
Gooch & Housego PLC
17 August 2022
For immediate release 17 August 2022
Gooch & Housego PLC
("G&H" or the "Company" or the "Group")
Trading Update and Directorate Changes
"Further order book momentum, but short-term output
constrained"
Gooch & Housego PLC (AIM: GHH), the specialist manufacturer
of photonic components & systems, provides an update on trading
and proposed directorate changes.
Strong order book
In the second half of the financial year, we have continued to
see strong and improving levels of demand for the Group's products
and services and the order book has reached another record level.
Overall demand is strong across all principal areas of the
business, namely industrial lasers, telecoms, A&D and life
sciences:
- Continued high demand for industrial lasers, in particular for
those used in semiconductor manufacturing where a combination of
high market growth and our new products winning market share has
led to substantial growth.
- Extended order book visibility has been secured for our
Hi-reliability fibre couplers for undersea cables and increasingly
for constellation space satellites.
- In the last few months, we have seen a notable increase in
A&D orders, both in the US and Europe, where there has been
further interest in our upgraded optical imaging system for
armoured vehicles following the award of the GBP4 million
Challenger 3 Tank contract announced earlier this year.
- Medical lasers continue to benefit from the return of elective
surgery and demand for our medical diagnostics products remains
high.
As at 31 July 2022 our order book stood at a record GBP140.6
million (31 July 2021: GBP97.7 million) a 43.9% increase on the
same time last year, or 32.6% at constant currency. This represents
an increase on the strong half year order book of 17.3% (31 March
2022: GBP119.9 million), or 12.6% at constant currency.
Current trading and full year outlook
G&H has and continues to invest materially to add further
productive capacity to meet the demands of a growing order book.
Our ability to expand capacity in the second half of the financial
year has however been 'gated' by highly competitive labour markets
in the UK and US, supply chain shortages, in particular electronic
parts from Asia and COVID-related absences. Relatively good
progress has been made hiring and training new operators, but this
has been partially offset by higher than 'normal' rates of
attrition. As such the capacity ramp up is taking longer than
expected and longer than similar capacity ramp ups have typically
taken in the past.
Second half trading levels are expected to be better than the
first half of the financial year due to the actions taken to
improve recruitment and ameliorate supply chain shortages with
higher inventory, but the longer ramp up and the higher level of
investment to meet the increased order book mean that adjusted
profit before tax is now forecast to be around GBP3.5 million lower
than management's previous expectations.
Given the lower levels of profitability now expected for the
financial year, management will review intangible asset carrying
values and make any required adjustments as part of the year end
close.
FY2023 Outlook
Given the strong order book visibility for FY2023 and the ramp
up in capacity that is being delivered by the Group we expect to
deliver double-digit volume growth in the coming financial year.
Our work to mitigate the effect of input cost inflation through
pricing adjustment continues to be successful and we expect this to
be ongoing. The growth in revenue is expected to positively drive
the Group's EBIT margin in FY2023.
Dividend
The Board's intention is to maintain a progressive full year
dividend per share in the range of 12.4p to 12.7p for FY2022
(FY2021: 12.2p), reflecting the positive longer-term outlook for
the Group.
Inorganic expansion
The Company continues to review options to support the growth of
the Group through acquisitions. The Group's robust balance sheet
and existing long term debt facilities mean that we are well placed
to execute on this element of our strategy.
Mark Webster, Chief Executive Officer of Gooch & Housego,
commented:
"In the second half of the financial year we have continued to
see strong and improving levels of overall demand and a record
order book across all principal areas of the business. G&H has
invested in adding productive capacity to meet increasing demand
but has been 'gated' by highly competitive labour markets in the UK
and US, supply chain shortages and COVID-related absences.
"In addition to the progress that has been made with recruitment
and retention we are accelerating the transfer of our higher volume
products to our contract manufacturer in Asia in order to add
further capacity.
"Fundamental demand for our photonic technologies and system
capabilities is strong and improving and though the short-term
impact of capacity constraints is disappointing we remain confident
in the long growth potential of all our target sectors."
Directorate changes
G&H also announces that Mark Webster will be retiring at the
end of this financial year and stepping down from his role as CEO
of G&H. Mark has served over 10 years at G&H, most recently
as CEO for over 8 years, and prior to that as a Non-Executive
Director. He has led the Group's transformation and expansion into
new market opportunities, especially in the Life Sciences and
A&D sectors, and most recently through a challenging
international economic backdrop which encompassed the COVID
pandemic.
The Board is pleased to announce that he will be succeeded as
CEO of G&H by Charlie Peppiatt, with effect from 14 September
2022, who until recently was Executive Vice President at TT
Electronics PLC, which he joined after they acquired Stadium Group
PLC in 2018 where he was CEO. Charlie brings a wealth of experience
from his career in global hi-tech businesses supplying into the
medical, industrial, aerospace and defence sectors, not only from
his time in these roles but also prior to that at Laird PLC, where
his roles included VP
Global Operations for Laird Technologies based in China, General
Manager for Amesbury Group based in USA and Managing Director with
Laird Security Systems in the UK.
There will be a period of handover between Mark and Charlie in
the latter part of September.
Gary Bullard, Chairman of G&H said:
"Mark has led G&H for over 8 years through significant
transformation and change. The Group is now a better balanced and
professional business with a strong platform for future growth. We
wish him well in his retirement and thank him for his service.
"I am delighted to welcome Charlie to G&H and believe he is
uniquely qualified to lead the Group in exploiting the significant
opportunities that are opening up to us and the continued growth of
the photonics sector."
Charlie Peppiatt said:
"I am thrilled to be joining the global team at G&H and look
forward to leading the organisation to accelerate its organic
growth and acquisition strategy, deliver improved profitability and
set the business on track to create further value for our
shareholders."
For further information
contact:
Gooch & Housego
Mark Webster / Chris Jewell PLC 01460 256440
Mark Court / George Cleary Buchanan 020 7466 5000
Christopher Baird / David
Anderson Investec Bank plc 020 7597 5970
Notes to editors
1.Gooch & Housego is a photonics technology business
headquartered in Ilminster, Somerset, UK with operations in the USA
and Europe. A world leader in its field, the company researches,
designs, engineers and manufactures advanced photonic systems,
components and instrumentation for applications in the Aerospace
& Defence, Industrial, Life Sciences and Scientific Research
sectors. World leading design, development and manufacturing
expertise is offered across a broad range of complementary
technologies.
2.All financial information included in this announcement is
sourced from unaudited management accounts and excludes any
specific items. This announcement contains certain forward-looking
statements that are based on management's current expectations or
beliefs as well as assumptions about future events. These are
subject to risk factors associated with, amongst other things, the
economic and business circumstances occurring from time to time in
the countries and sectors in which G&H operates. It is believed
that the expectations reflected in these statements are reasonable,
but they may be affected by a wide range of variables which could
cause actual results, and G&H's plans and objectives, to differ
materially from those currently anticipated or implied in the
forward-looking statements. Investors should not place undue
reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.
The following information is disclosed pursuant to Schedule Two
paragraph (g) of the AIM Rules for Companies.
Charles St John Stewart Peppiatt (aged 52 years) holds no
current directorships. In the past five years he has held the
following directorships or partnerships:
Dongguan Arlec Electrical Products Co. Limited
Ferrus Power Limited
Fox Industries Limited
Hale End Holdings Limited
Intron Limited
Kingslo Limited
KRP Power Source (UK) Limited
Optek Technology Inc
Stadium Asia Limited
Stadium Electrical Holdings Limited
Stadium Electronics Limited
Stadium IGT Limited
Stadium Power Limited
Stadium United Wireless Limited
Stadium Wireless Devices Limited
Stadium Zirkon UK Limited
STMC Limited
Stontronics Limited
TT Electronics IOT Solutions Limited
TT Electronics Sweden AB
Valuegolden Limited
Ying Si Ke Electrical Products Co. Limited
Zirkon Holdings Limited
There is no further information to be disclosed pursuant to Rule
17 or Schedule Two paragraph (g) of the AIM Rules for
Companies.
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