REG - discoverIE Group plc - Trading Update

DiscoverieAnnouncement

06/02/2024 07:00

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RNS Number : 0758C  discoverIE Group plc  06 February 2024

For Release

7.00am, 6 February 2024

 

discoverIE Group plc

Trading Update

 

Full year performance on track, positive order momentum

 

 

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 four months ended 31 January 2024 ("the Period").

 

The Group continues to make good financial and strategic progress and is on
track to deliver full year underlying earnings in-line with the Board's
expectations.

 

Orders in the Period grew by 3% organically(1) year-on-year with a similar
sequential growth and were in line with sales. This is the first growth in
orders since the quarter ending September 2022.

 

Group sales in the Period were 4% lower at CER following two years of strong
growth when sales increased by around 50%. Revenue growth of 3% from
acquisitions partly offset a 7% reduction in organic sales as customers
processed their inventory reductions, as expected. Performance was similar in
both divisions. Sales at the start of Q4 have returned to organic growth, with
margins continuing to be robust.

 

Year-to-date ("YTD") Group sales increased by 1% at CER comprising 3% from
acquisitions offset by organic sales being 2% lower. With strong gross margins
and tight control of operating expenses, the Group continues to perform well
through the cycle with YTD underlying profit higher than last year organically
and augmented by the contribution from acquisitions.

 

Design wins increased strongly in the third quarter contributing to YTD growth
of around 25%, with 90% being in our target growth markets. Design wins are a
key driver of future organic revenues and we have a strong pipeline of
opportunities in development.

 

The acquisitions of Silvertel in August 2023 and 2J Antennas in September 2023
are performing as expected with integrations proceeding as planned. Cash flow
continued to be strong with gearing reducing to 1.5x at 31 December 2023 (30
September 2023: 1.6x).

 

In January 2024, the Group made a small, higher margin bolt-on acquisition for
the Noratel magnetics cluster in North America for a mid-single digit EBIT
multiple.

 

With a clear strategy focused on structural and sustainable international
growth, a diversified customer base, a healthy order book and record pipeline
of design wins and acquisition opportunities, the Group has a resilient
business model that, despite varied market conditions, is well positioned to
make further good progress on its key priorities.

 

 

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

 

Buchanan
020 7466 5000

Chris Lane, Toto Berger

discoverIE@buchanan.uk.com

 

Notes

1.    Growth rates refer to the comparable prior year period unless stated.
 Organic growth for the Group's continuing operations compared with last year
is calculated at constant exchange rates ("CER") and is shown excluding the
first 12 months of acquisitions post completion (Magnasphere in January 2023,
Silvertel in August 2023 and 2J in September 2023). In calculating CER, the
average Sterling rate of exchange strengthened 1% against the Euro compared
with the average rate for the same period last year, 5% against the US Dollar
and 7% on average against the three Nordic currencies.

 

2.   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:

 

About discoverIE Group plc

 

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 sustainable key markets driven by structural growth and
increasing electronic content, namely renewable energy, medical,
electrification of transportation 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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