Record order growth drives DiscoverIE's results

Industrial electronics manufacturer DiscoverIE Group reported a 25% improvement in revenue in its preliminary results on Tuesday, to £379.2m, amid record growth in its orders and sales.

The FTSE 250 company said its underlying operating profit was 34% firmer in the 12 months ended 31 March, to £41.4m, while its underlying operating margin expanded by 0.7 percentage points to 10.9%.

Underlying earnings per share were ahead 31% at 29.4p, while the firm’s reported operating profit grew by 22% to £20.9m, all from its continuing operations.

DiscoverIE’s reported, fully-diluted earnings per share from total operations rocketed 102% year-on-year to 26.3p, while its gearing fell to 0.6x from 1.1x.

The company’s full-year dividend per share totalled 10.8p, up 6% year-on-year.

Looking ahead, the company said it was “well-positioned” for further growth, with its order book standing at a record £224m, while the board said its pipeline of acquisition opportunities remained “strong”.

The directors said the new financial year had started “well”, with continued strong organic revenue growth.

“These results reflect the strength of the DiscoverIE business model which is performing well in good demand conditions and an inflationary environment and follows a resilient performance through the weaker Covid conditions of the year before,” said group chief executive officer Nick Jefferies.

“With record growth in orders, sales, order book and underlying earnings per share, which increased by 31%, continuing revenues and earnings are now well ahead of the pre-Covid period.

“I would like to thank all of our employees around the group for their tremendous effort and flexibility over the last two years that has led to these results.”

Jefferies said the firm was also making “good progress” on its sustainability initiatives.

“By switching our sites to renewable sources of energy where possible, the group's like-for-like carbon emissions were 33% lower in calendar year 2021 than 2019 and we are on track to achieve our goal of a 50% reduction by 2025.

“Following the group's exit during the year from the business of distribution, DiscoverIE is now solely focused on the design and manufacture of customised electronics for industrial applications; our continuing focus is on achieving organic growth and new design wins in sustainable target markets, together with accretive acquisitions.

“The group is well-funded, with a strong balance sheet and cash flow, and has significant funding headroom for further acquisitions.”

The new financial year started “well”, Nick Jefferies explained, with “continued strong growth” in organic sales, and the order book at “record high” levels.

“While supply chain headwinds and inflationary pressures remain, they are expected to be manageable.

“With a clear strategy focused on long-term, high quality, structural and sustainable growth markets across Europe, North America and Asia, a diversified customer base, a record order book and a strong pipeline of acquisition opportunities, the group is well positioned to make further good progress in the year ahead.”

At 1044 BST, shares in DiscoverIE Group were up 4.4% at 712p.

Reporting by Josh White at Sharecast.com.