Gooch & Housego reports strong second half of trading

8th Oct 2024 15:45

(Sharecast News) - Gooch & Housego, a specialist manufacturer of photonic components and systems, reported a strong second half of trading in an update on Tuesday, in line with market expectations.

The AIM-traded company said its industrial markets saw increased volumes in fibre optic modules and assemblies for advanced lithography systems and subsea data networks.

However, revenue from industrial laser customers remained flat, with a sustained recovery in broader industrial laser and semiconductor markets expected in the second half of 2025.

In the aerospace and defence sector, G&H said it experienced revenue growth from precision optics and advanced sighting systems for military platforms, alongside continued strong demand for ring laser gyro components in commercial aerospace.

The company said it also benefited from additional capacity added to meet growing demand in those markets.

Its life sciences division meanwhile saw increased volumes in medical diagnostic instruments in the second half due to customer programme phasing, with the research and development team actively supporting next-generation instrument design.

Medical laser deliveries showed signs of recovery as a prolonged destocking cycle neared its end.

Overall, G&H said it expected full-year revenue and adjusted pre-tax profit to meet current market expectations, supported by stronger second-half performance.

Cash generation was described as robust, allowing the group to reduce borrowing by $3.9m, with net debt slightly better than market forecasts.

As of 30 September, the group's order book stood at £104.5m, down from £115.3m the prior year, reflecting order timing in medical diagnostics and industrial markets.

Despite the decline, aerospace and defence orders had grown strongly, and the company said it saw a healthy pipeline of prospects in both the UK and the US.

"Following the first half result, the group recovered well in the second half to deliver the expected increase in output," said chief executive officer Charlie Peppiatt.

"Whilst we do not expect to see our industrial laser and semiconductor markets return to growth until next year, we are seeing strong demand for our advanced optical systems capabilities from the defence sector and there are significant new business opportunities that we are working hard to secure."

Peppiatt said the company was continuing to make progress on delivering the self-help, technology and portfolio activities underpinning its strategic plan.

"We saw further improvement with on time delivery performance in 2024 and customer feedback is now trending in a positive direction.

"The group is now better positioned to benefit from the anticipated sustained recovery from our end markets next year thanks to the disciplined implementation of our strategy."

G&H said it would announce its audited results for the 2024 financial year on 3 December.

At 1541 BST, shares in Gooch & Housego were up 6.35% at 417.97p.

Reporting by Josh White for Sharecast.com.