REG - Diploma PLC - Trading Statement

DiplomaAnnouncement

21/07/2022 07:00

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RNS Number : 2077T  Diploma PLC  21 July 2022

 

DIPLOMA PLC

 
           10-11 CHARTERHOUSE SQUARE, LONDON EC1M 6EE

TELEPHONE: +44 (0)20 7549 5700

 

 

21 JULY 2022

 

DIPLOMA PLC

STRONG Q3 PERFORMANCE, CONFIDENT IN FULL YEAR GUIDANCE

 

Diploma PLC, the international group distributing specialised products and
services, today issues a trading update for the nine months ended 30 June
2022.

Year to date performance

Performance in the third quarter has remained strong with organic growth of
13%.  We continue to focus on revenue diversification activity to drive
growth, build scale and increase resilience.  We drive this diversification
by positioning behind structurally growing end markets, further penetrating
core developed economies and extending product ranges to expand addressable
markets.

During the first nine months of FY 2022:

 ·             Organic revenue growth was 15% driven by our organic revenue initiatives,
               continuing positive demand and pricing:

               o Controls: acceleration at International Controls and continued strong volume
               growth at Windy City Wire.

               o Seals: sustained market share gains in North American Aftermarket and
               broad-based growth at International Seals against a robust comparator.

               o Life Sciences: as expected, impacted by one-off COVID-related revenues in
               the prior year.  Remain confident in a return to growth during H2.
 ·             The impact of the pass through of higher copper prices has moderated during Q3
               against a higher comparator, contributing ca. 3% to organic growth in the year
               to date.
 ·             Reported revenue growth was 26%, reflecting a positive contribution from high
               quality acquisitions and a ca. 2% foreign exchange tailwind
 ·             Strategically important acquisitions completed in Q3 will accelerate future
               organic growth in key business lines:

               o R&G Fluid Power Group: successfully delivering on its organic and
               inorganic growth strategy, including two small bolt-on acquisitions for a
               total consideration of ca. £4 million.

               o Accuscience: exciting prospects, particularly in the high growth diagnostics
               segment.
 ·             We remain disciplined in our approach to acquisitions and our pipeline is
               encouraging.
 ·             Our operating margin performance continues to be strong, demonstrating the
               power of our value-added service model which drives customer loyalty and
               pricing power.  We continue to successfully manage supply chain pressures,
               tight labour markets and inflation.

Full year outlook positive and unchanged

The Group's performance in the first nine months of FY 2022 means we are
confident in delivering our full year guidance:

 ·             Low double digit organic revenue growth.
 ·             Reported revenue growth a little over 20%.
 ·             Operating margin at the top end of the 18-19% guidance range.
 ·             Strong cash generation currently expected to result in net debt/EBITDA of ca.
               1.5x by year end.

 

Whilst the wider macroeconomic outlook is uncertain, the Group's resilience is
supported by our increasing revenue diversification, our value-added model,
and strong cash generation and balance sheet.  We remain focused on executing
our strategy of building high-quality, scalable businesses for organic growth
and are confident in our long-term prospects.

Our next scheduled update will be the publication of our full year results on
21 November 2022.

 

Johnny Thomson, Chief Executive Officer, and Barbara Gibbes, Chief Financial
Officer, will host a conference call for analysts and investors this morning
at 8:30am (UK time). Conference call dial in details:

·      Dial in: +44 (0)330 165 4012

·      Participant access code: 6981796

 

A recording of the call will be made available on the website later in the day
or can be requested by contacting investors@diplomaplc.com
(mailto:investors@diplomaplc.com)

 

 Enquiries:

 Diploma PLC                                +44 (0)20 7549 5700
 Johnny Thomson, Chief Executive Officer
 Barbara Gibbes, Chief Financial Officer
 Kellie McAvoy, Head of Investor Relations

 Tulchan Communications                     +44 (0)20 7353 4200
 Martin Robinson
 Olivia Peters

 

Further information on Diploma PLC can be found at www.diplomaplc.com
(http://www.diplomaplc.com)

 

 

Notes:

 

1.   This trading update is based upon unaudited management accounts and has
been prepared solely to provide additional information on trading to the
shareholders of Diploma PLC. It should not be relied on by any other party for
other purposes. Certain statements made in this update are forward-looking
statements. Such statements have been made by the Directors in good faith
using information available up until the date that they approved this
Statement. Forward-looking statements should be regarded with caution because
of the inherent uncertainties in economic trends and business risks.

 

2.   Diploma PLC uses alternative performance measures as key financial
indicators to assess the organic performance of the Group. All references in
this Statement to "organic" revenues refer to reported results on a constant
currency basis, before acquired or disposed businesses (ex-growth basis) and
include growth generated by acquisitions under our ownership.

 

3.   A copy of this Statement, together with further information about
Diploma PLC, may be viewed on its website at www.diplomaplc.com
(http://www.diplomaplc.com/)

 

 LEI: 2138008OGI7VYG8FGR19

 

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