REG - Gooch & Housego PLC - AGM Trading Update

Gooch & HousegoAnnouncement

21/02/2024 07:00

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RNS Number : 8339D  Gooch & Housego PLC  21 February 2024

This announcement contains inside information as stipulated under the UK
version of the Market Abuse Regulation (EU no. 596/2014) as it forms part of
UK law by virtue of the European Union (Withdrawal) Act 2018 (as amended from
time to time).

 

     21 February 2024

 

Gooch & Housego PLC

("G&H" or the "Company" or the "Group")

 

AGM Trading Update

 

"Further order book growth but near-term demand impacted by destocking"

 

 

Gooch & Housego PLC (AIM: GHH), the specialist manufacturer of photonic
components & systems, will hold its Annual General Meeting at 11.00 a.m.
today at the Company's headquarters in Ilminster, Somerset.

 

In the first four months of the financial year the Group's order book has
increased to £128.5m (September 2023: £124.1m) supported by strong intake
from our medical diagnostic customers and new orders for our armoured vehicle
periscope systems. We have also secured an important new customer in the
sub-sea data communications market which will ramp-up to support revenues in
the second half of FY2024.

 

The Group has made further progress in implementing operational improvements
in its production facilities and has continued to reduce lead times offered to
customers.  We are delivering on our strategy of transferring additional
product lines to our lower cost contract manufacturing partners which will
support greater operational capacity and flexibility as well as some
medium-term margin expansion.

 

As previously stated, some of our customers in the Industrial and Medical
laser markets have been reducing their inventory holdings and reporting near
term demand weakness from some end markets. This period of inventory
adjustment is proving to be deeper and more prolonged than previously
anticipated. Our semiconductor market customers have reduced near-term demand
but still expect strong growth in the medium term. We have also received
customer notification that certain US A&D programmes will no longer go
ahead or have been deferred.

 

As a result, the Group's trading for FY2024 is expected to be more weighted to
the second half and profit growth for the full year to be lower. Adjusted
profit before tax is anticipated to be circa £3 million below management's
previous expectations.

 

Given the strong medium term customer demand demonstrated by a growing order
book, recent operational improvements and the Group's strategic focus, we
believe we remain extremely well placed to respond quickly and benefit as
several key end markets recover.

 

Strategy Update

 

The Group is executing against the recently communicated strategic objectives
and is making strong progress. The build out of the production and R&D
facilities at our new US medical diagnostics hub located within the GS Optics
campus in Rochester, NY is progressing well. We have secured our first
customer order for our US R&D team at the facility and are in discussions
with a number of other Life Sciences customers for further R&D and
production orders to be supplied from the facility. Our review of the Group's
product portfolio is well advanced and near-term actions in this area are
expected to support the future profit margin improvement of the Group,
especially in our A&D business.

 

The integration of the recently acquired GS Optics and Artemis businesses
within the Group is well advanced. The commercial synergies anticipated from
the combination of our precision optics capabilities with Artemis' thin film
coating services has been confirmed by some recent new contract awards and
further large orders are being pursued. Whilst in the near-term GS Optics is
impacted by the slowdown in demand from destocking by some of its Industrial
market customers, we have received significant levels of interest from the
Group's customers in our new polymer optics capabilities.

 

The Group's financial position remains strong. Working capital levels have
been reduced in the first four months of the financial year and net debt at
the end of January 2024 stood at £30.5m (Sept 2023: £31.7m).

 

Charlie Peppiatt, Chief Executive Officer of Gooch and Housego, commented:

"Whilst we are pleased with the order book growth, reduction in lead times and
strategic progress, the Group's performance is likely to be impacted in the
near term by market dynamics. Nonetheless, we remain focused on executing on
our strategic objectives and our improved customer service has been recognised
with important new orders from both existing and new customers.

"Our review of the Group's product portfolio is nearing completion. This will
be an important contributor in improving the profitability of the Group,
especially in our A&D business.

"G&H is well positioned in structural growth markets and is executing on
its strategic plan that will deliver sustainable margin growth for the Group."

For further information please contact:

 

 Charlie Peppiatt, Chief Executive Officer                  Gooch & Housego PLC      +44 (0) 1460 256440

 Chris Jewell, Chief Financial Officer

 Mark Court / Sophie Wills / Abigail Gilchrist              Buchanan                 +44 (0) 20 7466 5000

 G&H@buchanan.uk.com (mailto:G&H@buchanan.uk.com)

 Christopher Baird / David Anderson                         Investec Bank plc        +44 (0) 20 7597 5970

 

 

Notes to editors

 

1.     Gooch & Housego is a photonics technology business
headquartered in Ilminster, Somerset, UK with operations in the USA and
Europe. A world leader in its field, the company researches, designs,
engineers and manufactures advanced photonic systems, components and
instrumentation for applications in the Aerospace & Defence, Industrial,
Life Sciences and Scientific Research sectors. World leading design,
development and manufacturing expertise is offered across a broad range of
complementary technologies.

 

2.     All financial information included in this announcement is sourced
from unaudited management accounts and excludes any specific items. This
announcement contains certain forward-looking statements that are based on
management's current expectations or beliefs as well as assumptions about
future events.  These are subject to risk factors associated with, amongst
other things, the economic and business circumstances occurring from time to
time in the countries and sectors in which G&H operates.  It is believed
that the expectations reflected in these statements are reasonable but they
may be affected by a wide range of variables which could cause actual results,
and G&H's plans and objectives, to differ materially from those currently
anticipated or implied in the forward-looking statements.  Investors should
not place undue reliance on any such statements. Nothing in this announcement
should be construed as a profit forecast.

 

The person responsible for arranging the release of this announcement on
behalf of the Company is Chris Jewell, Chief Financial Officer.

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