11th May 2020 08:52
(Alliance News) - Diploma PLC on Monday said it delivered a robust first-half performance, but outlook for the second half remains uncertain as the global response to Covid-19 pandemic will hurt the company's operations in many of its major markets.
For the half-year ended March 31, the seal and cables maker's revenue rose 9% to GBP283.6 million from GBP260.4 million last year, and pretax profit increased 4% to GBP41.6 million from GBP40.1 million.
"The outbreak of the Covid-19 pandemic had a significant impact on trading activity in the last two weeks of the period which, together with a softer industrial environment during the period, contributed to underlying revenue increasing by 1% against the prior period. Acquisitions completed in the last year contributed 9% to reported revenue and there was a 1% currency headwind from a modest strengthening of UK sterling against most major currencies," the company explained.
In the Life Sciences division, reported revenue increased by 2% in the first half, while Seals unit saw a 20% surge due to contribution from past acquisitions. The Controls business reported 1% revenue growth.
The technical products supplier has decided to suspend payment of an interim dividend given the current uncertainty. It plans to review dividend payout when there is sufficient clarity over the virus impact.
Chief Executive Officer Johnny Thomson said: "We had a good first half, delivering a robust performance and progressing well with our strategic objectives. However trading in April has been more challenging as it reflects the economic impact of the Covid-19 pandemic. Diploma has a resilient business model and a strong balance sheet and we have taken decisive actions to protect our cash flows and liquidity, all of which give me confidence in our ability to emerge successfully from this crisis".
The FTSE 250-listed company recorded a 16% drop in revenue for the month of April due to Covid-19, but it continues to continues to generate good operating profit and cash flow.
The company also has taken actions to mitigate the virus impact on the business including freezing all capital expenditure and discretionary spend and managing working capital. Its board also has decided to take a 20% pay and fee cut for the duration of the crisis.
At March 31, Diploma had GBP66 million of available liquidity and net bank debt of GBP29.9 million. The company has received confirmation that it is eligible for up to GBP225 million under the government's Covid Corporate Financing Facility.
Shares in Diploma were up 1.1% at 1,789.00 pence each in London on Monday morning.
By Tapan Panchal; [email protected]
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