Oxford Instruments revenue rises amid mixed trading

(Sharecast News) - Oxford Instruments reported a 4.6% increase in first-half revenue on Tuesday, totalling £209.7m, driven by a robust performance in research and discovery. The FTSE 250 company said its adjusted operating profit for the six months ended 30 September stood at £36.5m, while the adjusted operating profit margin was 17.4%, down 100 basis points year-on-year.

Adjusted profit before tax increased 0.5% to £37.5m, while adjusted basic earnings per share decreased to 49.4p, down 2.8%.

Normalised cash conversion was 41%, significantly lower than the 65% reported in the first half of 2022.

The firm's net cash position was £79.1m, down £97.1m in the same period last year.

Regarding statutory results, revenue mirrored the adjusted figures at £209.7m, while operating profit increased 8.7% to £28.6m, with an operating profit margin of 13.6%, up 50 basis points.

Profit before tax surged 11.3% to £29.6m on a statutory basis, and basic earnings per share increased 7.5% to 38.6p.

The dividend per share for the year saw 6.5% growth, reaching 4.9p.

Oxford Instruments reported notable success in the period with 7.5% revenue growth at constant currency, primarily fueled by solid growth in research and discovery.

The order book saw 10% growth at constant exchange rates, amounting to £332m, following a positive book-to-bill ratio of 1.07.

However, orders were slightly down by 2.3% at constant currency compared to a robust comparative period in 2022, which saw an 18.7% increase.

Strategically, Oxford Instruments maintained leading positions in key markets, including healthcare and life science, semiconductors focusing on compound semiconductors, and advanced materials.

Strong revenue growth was evident in healthcare and life science, of 22% at constant currency, and advanced materials of 12%, while the semiconductor and communications sector demonstrated resilience with 2% growth.

The company's product portfolio, including advanced materials research tools and optical microscopy systems for the healthcare and life science market, experienced strong customer demand.

Furthermore, Oxford Instruments invested in infrastructure to support future growth, including a new £75m state-of-the-art facility for compound semiconductor systems in Bristol and a £15m extension of production capacity in Belfast to meet increasing demand in the life science sector.

Operational and IT capabilities were enhanced with a £2m investment in the first half to drive process and cost efficiencies.

"This is a very robust set of results for Oxford Instruments - our focus on specialist niches within structural growth markets has supported strong revenue and adjusted operating profit growth at constant currency, and our positive book-to-bill of 1.07 and order book growth of 10% demonstrates continued strong global demand for our leading products and services," said chief executive officer Richard Tyson.

"We enter the second half with a strong order book and a good pipeline, remaining mindful of the current macroeconomic and political climate.

"Our operational improvement programme is expected to support an increase in production, underpinning our confidence in an improvement in second half trading, with our normal seasonal second half weighting."

Tyson said the company's expectations for the full-year trading performance remained unchanged.

"Having joined Oxford Instruments six weeks ago, I have been busy getting to know the business.

"I have already spent a considerable amount of time meeting our people and customers and immersing myself in the business.

"These early meetings have reinforced my reasons for joining and the key strengths which drive Oxford Instruments' leading position in the marketplace."

Richard Tyson explained that included differentiated, innovative, value-added technologies, colleagues with deep expertise, and leading positions in structural growth markets.

"Oxford Instruments has made progress over recent years in becoming more commercial, with increased customer intimacy and end-market focus.

"This remains an important strategic focus, with further opportunity to enhance the group's customer interface and new product development.

"I believe there is a substantial opportunity to pair this with enhanced operational performance and effectiveness to deliver even better outcomes for customers, together with margin expansion and attractive, sustainable growth."

Tyson said Oxford's strong financial position also supported the current elevated levels of organic investment for future growth and its ability to selectively make acquisitions to augment that growth.

"The group is in a strong position with exciting prospects.

"We will continue to build on Oxford Instruments' excellent reputation amongst the world's leading companies and scientific research communities.

"I look forward to working with the team to build on these strong foundations."

At 1124 GMT, shares in Oxford Instruments were up 5.51% at 2,030p.

Reporting by Josh White for Sharecast.com.