16th May 2016 06:43
LONDON (Alliance News) - Technical products and services company Diploma PLC on Monday said profit declined in the first half of its financial year despite a rise in revenue as currency effects and acquisition costs hit operating margin.
The FTSE 250-listed firm said pretax profit for the six months to March 31 was GBP25.6 million, down 2.0% year-on-year from GBP26.0 million. Revenue grew 10% to GBP179.1 million from GBP163.2 million, but the group's adjusted operating margin shrunk to 17.2% from 18.1% due to currency effects on its healthcare business and costs related to recent acquisitions.
Diploma has three operating divisions, covering life sciences, seals and controls. The life sciences arm makes medical devices and consumables for the healthcare sector. The seals arm makes hydraulic seals, gaskets and cylinders for the industrial market, and the controls units makes specialised wiring, connectors and fasteners for a range of industries.
Life sciences revenue grew 1.0% in the half, despite budget pressures in key end-markets. Seals revenue grew 22% thanks to the acquisitions of Kubo, Swan Seals and WCIS but was flat on an underlying basis against a tough comparative. Controls revenue also was boosted by acquisitions but fell on an underlying basis due to ongoing weakness in UK industrial markets.
"With challenging trading conditions likely to persist through the second half of the year, we will continue to take advantage of our strong financial position to target further acquisition opportunities to support future growth and deliver shareholder value," said Diploma Chief Executive Bruce Thompson.
Diploma said it will pay a 6.2 pence interim dividend, up 7.0% year-on-year, reflecting its confidence in its growth prospects.
By Sam Unsted; [email protected]; @SamUAtAlliance
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