Oxford Instruments shares jump on profit beat, restructure plan

11th Jun 2024 07:45

(Sharecast News) - Shares in Oxford Instruments surged on Tuesday after the industrial and scientific research tech group announced plans to simplify its corporate structure alongside full-year profits that came in ahead of expectations.

Oxford Instruments said significant overlap between business units and markets meant its structure has become "overly complex", and it now plans to consolidate its eight business units and six end-markets into just two divisions with three core markets.

The company said this should "drive efficiencies and operational gearing, and provide greater transparency of Oxford Instruments as an investment proposition".

Over the year to 31 March, revenues were up 5.8% at £470.4m, however a dip in adjusted operating profit margins from 18.1% to 17.1% meant adjusted pre-tax profit was just 1.6% higher at £83.3m, while adjusted earnings per share slipped 3.3% to 109p.

Analysts at Shore Capital said revenues were around 3% below consensus forecasts, but adjusted pre-tax profit was 9% ahead of market estimates due to higher finance income, while adjusted EPS beat predictions by 3%.

"I am pleased with the results for the full year and the development of the business during the year," said chief executive Richard Tyson. "We have rebalanced our positions in regional markets in the face of geopolitical shifts, focusing our resources on non-sensitive areas in China, and successfully growing revenue and orders in Europe and elsewhere in Asia."

Looking ahead, the company outlined new medium-term targets, aiming to grow organic revenues at a CAGR of 5-8%, while improving adjusted operating margins to at least 20%.

"We are in a strong position to improve and grow the business, putting it on a sustainable growth footing through our market-leading offering together with operational and efficiency improvements. Given our strong order book and pipeline, coupled with positive business improvement actions, we expect to make good constant currency progress in the full year ending March 2025," Tyson said.

In a separate statement, Oxford Instruments announced that CHF17m (£15m) acquisition of Zurich-based FemtoTools, a developer of nanoindentation instruments, which enable the imaging of mechanical properties of intricate microstructures for materials research and semiconductor applications.

The stock was up 11.4% at 2,740p by 0826 BST.