Diploma on track as trading picks up

Diploma said it was on track to meet expectations for annual profit after trading improved in the fourth quarter.

The technical equipment supplier said its business had proved resilient during the Covid-19 crisis and that operating profit for the year to the end of September was expected to be in line with analysts' average forecast.

Revenue fell 12% in the third quarter and by 21% on an underlying basis but trading improved in June and has continued to do so since. Revenue fell 4%, or 10% on an underlying basis, in July.

Diploma said it took part in the UK's job retention scheme early in the crisis but that based on its performance the company has repaid the government. All furloughed workers returned to work by the end of June.

Johnny Thompson, Diploma's chief executive, said: "Diploma has delivered a resilient trading performance, with revenues continuing to improve across all of our sectors, and strong profit and cash generation throughout the period. Whilst the outlook for the virus remains uncertain, we are trading in line with expectations and are confident about the group's growth prospects."

The FTSE 250 company said life sciences demand started to recover at the end of the third quarter as hospitals reopened for general activity with underlying revenue down 6% in July. The industrial seals business held up well and underlying revenue fell 7% in July.

Controls was most affected by the crisis and though civil aerospace is "challenging" other parts of the business are recovering, Diploma said. Underlying revenue fell 17% in July compared with 34% in the third quarter.

Diploma said it remained on the lookout for acquisitions and was optimistic about buying high quality businesses to support growth.

The company's shares dipped 0.2% to £19.54 at 08:17 BST.