REG - discoverIE Group plc - First Half Trading Update

DiscoverieAnnouncement

15/10/2024 07:00

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RNS Number : 1303I  discoverIE Group plc  15 October 2024

For Release

7.00am, 15 October 2024

 

discoverIE Group plc

 

First Half Trading Update

 

First half earnings in line with Board expectations

 

discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a leading
international designer and manufacturer of customised electronics to industry,
today issues a trading update for the first six months of the financial year
ending 31 March 2025 ("the Period").

 

The Group remains on-track with the Board's underlying earnings expectations
for this financial year unchanged. The Group's strategy and focus on
operational improvements is enabling continued margin development and robust
earnings performance through the economic cycle. While de-stocking continued
at some customers, it did so at a lesser rate. Order levels have stabilised
and design wins, a key forward-looking barometer, increased strongly.

 

Group sales for the Period were 4% lower than last year at CER((1)) (5% lower
on a reported basis). Organic((2)) sales were 7% lower than prior year in the
second quarter (from 12% lower in the first quarter), ending 10% lower for the
Period. There was an 8% contribution from acquisitions offset by a 2%
reduction related to the disposal of Santon's lower-margin solar business unit
which was announced last financial year.

 

Gross margins in the Period were robust and operating costs and working
capital tightly managed, with the Group on track to achieve its 13.5%
underlying operating margin target this financial year and 15% over the medium
term.

 

Orders returned to growth in the Period, increasing by 8% at CER, compared
with the first half last year, and increased by 8% sequentially. The
book-to-bill ratio increased to 0.98 from 0.89 last financial year (H1
2023/24: 0.87; H2 2023/24: 0.91). Organically, orders increased by 1% in the
Period and by 5% sequentially.

 

Design wins increased in the Period by 8%, with an estimated lifetime value of
£205m, being 33% higher than two years prior. Design wins are a key driver of
future organic revenues and the Group has a strong pipeline of opportunities.

 

During the second quarter, the Group acquired HiVolt Limited, a specialist
capacitor manufacturer based in Northern Ireland for £3.8m. HiVolt and the
other five acquisitions made in the last 14 months are performing well, with
integrations proceeding as expected. Additionally, the disposal of Santon's
solar business unit is well progressed with two thirds of sale proceeds now
received as scheduled.

 

With continuing strong operating cash flow, gearing((3)) at 30 September 2024
is expected to be 1.45x, reducing from 1.5x at 31 March 2024 and below the
lower end of the Group's target gearing range of 1.5x to 2.0x.

 

With an excellent pipeline of design wins and acquisition opportunities
supported by high cashflow, the Group is well positioned to build on its
strong through-cycle growth record and deliver on its strategic objectives as
market conditions stabilise.

 

The Group will release its interim results on 3 December 2024.

 

 

 

 

 

For further information, please contact:

 discoverIE Group
 plc

 01483 544 500

 Nick Jefferies             Group Chief Executive

 Simon Gibbins            Group Finance Director

 Lili Huang                   Head of Investor Relations

 Burson
 Buchanan
 020 7466 5000

 Chris Lane, Toto Berger, Jack Devoy

 discoverIE@buchanan.uk.com (mailto:discoverIE@buchanan.uk.com)

 

Notes

1.     Growth rates refer to the comparable prior year period unless
stated. In calculating CER for the Period, the average Sterling rate of
exchange strengthened 2% against the Euro compared with the average rates for
last year, 2% against the US Dollar and 2% on average against the three Nordic
currencies, resulting in a 1.5% sales reduction for the Period.

 

2.     Organic growth for the Group compared with last year is calculated
at CER and is shown excluding the first 12 months of acquisitions post
completion (Silvertel in August 2023, 2J Antennas Group ("2J") in September
2023 and Shape, DTI and IKN in Q4 2023/24, Hivolt in July 2024) and excluding
last year's announced disposal of the Santon solar business unit.

 

3.     Gearing is defined as net debt divided by underlying EBITDA
(excluding IFRS 16, annualised for acquisitions).

 

4.     This trading update is based upon unaudited management accounts and
has been prepared solely to provide additional information on trading to the
shareholders of discoverIE Group 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
update. Forward looking statements should be regarded with caution because of
the inherent uncertainties in economic trends and business risks.

 

 

Notes to Editors:

 

discoverIE Group plc is an international group of businesses that design and
manufacture innovative electronic components for industrial applications.

 

The Group provides application-specific components to original equipment
manufacturers ("OEMs") internationally through its two divisions, Magnetics
& Controls, and Sensing & Connectivity. By designing components that
meet customers' unique requirements, which are then manufactured and supplied
throughout the life of their production, a high level of repeating revenue is
generated with long-term customer relationships.

 

With a focus on key markets driven by structural growth, increasing electronic
content and sustainability, namely medical, electrification of transportation,
renewable energy, security and industrial automation & connectivity, the
Group aims to achieve organic growth that is well ahead of GDP and to
supplement that with complementary acquisitions. The Group is committed to
reducing the impact of its operations on the environment with an SBTi-aligned
plan to reach net zero. With its key markets aligned with a sustainable
future, the Group has been awarded an ESG "AA" rating by MSCI and is Regional
(Europe) Top Rated by Sustainalytics.

 

The Group employs c.4,500 people across 20 countries with its principal
operating units located in Continental Europe, the UK, China, Sri Lanka, India
and North America.

 

discoverIE is listed on the Main Market of the London Stock Exchange and is a
member of the FTSE250, classified within the Electrical Components and
Equipment subsector.

 

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