REG - discoverIE Group plc - Trading Update

DiscoverieAnnouncement

16/04/2025 07:00

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RNS Number : 1827F  discoverIE Group plc  16 April 2025

For Release

7.00am, 16 April 2025

discoverIE Group plc

 

Trading Update

 

Strong finish to the year with the Group on track to deliver record underlying
profits & earnings

 

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 its financial year ended 31 March 2025
("FY2024/25"), ahead of the announcement of its preliminary results on 4 June
2025.

 

The Group expects to deliver another year of record profitability, continuing
its growth in underlying operating profits and margins in each of the last ten
years (in-line in the covid year((1))). Our strategy of building a group of
complementary, highly aligned, niche electronic engineering businesses
continues to generate excellent results and resilience in volatile market
conditions with underlying earnings for FY2024/25 expected to be slightly
ahead of Board expectations.

 

Fourth quarter orders increased by 11% sequentially and by 15%
organically((2)) year-on-year with similar organic growth in both divisions.
Sales increased by 19% sequentially (4% lower organically year-on-year). The
S&C division continued to lead the recovery cycle with 5% organic sales
growth, whilst M&C was -10%, in line with the previous quarter, where
elements of customers' overstocking remain.

 

Group sales for the year were 2% lower than the prior year at CER((3)).
FY2024/25 net revenue growth of 5% from acquisitions, less disposals, was
offset by a 7% reduction in organic sales. Sterling strength during the year
impacted Group sales by 1%, with reported Group revenue being 3% below last
year.

 

Operational performance continues to be strong, with resilient gross margins,
tight operational management and excellent free cash flow. Second half
underlying operating margin is expected to be comfortably ahead of the first
half (H1 2024/25: 13.8%), making further progress towards our FY2027/28 target
of 15%, and reflecting the positive impact from our programme of efficiency
improvements and higher quality revenue streams. The Group is well funded,
with year-end gearing((4)) of 1.45x, below the lower end of the Group's target
gearing range of 1.5x to 2.0x.

 

The Group has built an international manufacturing capability over many years
that is flexible, resilient, efficient and able to support customers through
volatile trading conditions. Of our 38 manufacturing sites across 20
countries, seven are in the US, providing local manufacturing for over half of
local demand. Our US businesses, which account for around a quarter of Group
sales, import very little from China and have capacity to manufacture all
local product sales in the US. We expect to move more production to the US in
the coming months, as well as capturing new commercial opportunities from
tariff affected competitors.

 

Our products are uniquely engineered, predominately sole sourced, with high
added value and are essential for customers' designs, typically being a small
proportion of overall cost. We will pass on incremental costs arising from
higher tariffs, whilst doing all we can to mitigate the effects of tariffs by
optimising production location.

 

The Group is very well placed to continue its resilient performance and
development, with numerous organic and inorganic opportunities underway,
whilst remaining mindful of the volatile trading conditions.

 

 

 

 

 

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.   Covid year was the year ended 31 March 2021. Despite Covid, the Group
delivered the same underlying profits and underlying operating margin as for
the year ended 31 March 2020, demonstrating the resilience of the business.

 

2.   Growth rates refer to the comparable prior year period unless stated.
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, Shape,
DTI and IKN in Q4 2023/24, Hivolt in July 2024 and Burster in January 2025)
and excluding last year's announced disposal of the Santon solar business
unit.

 

3.    In calculating CER for the Period, the average Sterling rate of
exchange strengthened 3% against the Euro compared with the average rates for
last year, 1% against the US Dollar and 3% on average against the three Nordic
currencies.

 

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

 

5.   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.

 

5.  The information contained within this announcement is deemed by the Group
to constitute inside information as stipulated under the Market Abuse
Regulation, Article 7 of EU Regulation 596/2014. Upon the publication of this
announcement via Regulatory Information Service, this inside information is
now considered to be in the public domain.

 

 

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, high quality 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 in order to reach net
zero. With its key markets aligned with a sustainable future, the Group has
been awarded an ESG "A" 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 FTSE 250, classified within the Electrical Components and
Equipment subsector.

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