TIDMDSCV
RNS Number : 6908P
discoverIE Group plc
11 October 2023
For Release
7.00am, 11 October 2023
discoverIE Group plc
First Half Trading Update
Sustained positive trading momentum, with significant margin
progress
discoverIE Group plc (LSE: DSCV, "discoverIE" or "the Group"), a
leading international designer and manufacturer of customised
electronics to industry , today issues a trading update for the
first six months of the financial year ending 31 March 2024 ("the
Period").
The Group continues to make good financial and strategic
progress and is on track to deliver full year underlying earnings
in-line with the Board's recently upgraded expectations.
Group sales in the Period were 4% ahead of last year(1) at
CER(2) , comprising 1% organic (3) growth and 3% from acquisitions.
After foreign exchange effects of 3%, reported sales were 1% ahead
of last year. Sales increased by 2% organically in the Magnetics
& Controls division and by 1% organically in the Sensing &
Connectivity division. Whilst, as expected, we have seen some
normalisation of order books, our focus on a diverse range of
industrial customers in our four target markets (renewable energy,
electrification of transportation, medical and industrial &
connectivity) provides us with long term, structural growth in less
cyclical markets which has led to resilient overall demand and
sustained positive trading momentum.
Orders in the second quarter increased by 2% sequentially, with
the book to bill ratio increasing from 0.84 in the first quarter,
to 0.91 in the second quarter. The order book at 30 September 2023
represents just over five months coverage, remaining ahead of
historic levels and providing good visibility for the second half
of the year.
Through a combination of initiatives including improving sales
mix, cost and efficiency actions, operating margins continue to
strengthen. Operating margins during the Period are expected to
increase by around 100 basis points year-on-year, making excellent
progress towards our FY25 target of 13.5% and mid-term target of
15%. The benefits of this margin improvement will more than offset
both rising interest charges and foreign exchange translation
impacts, with the Group expecting to report record underlying
earnings per share for the Period.
Design wins increased strongly in the Period, by 23%, with an
estimated lifetime value of GBP190m and with 89% being in our
target growth markets. Design wins are a key driver of future
organic revenues and we have a strong pipeline of future
opportunities in development.
The acquisitions of Silvertel on 31 August 2023 and 2J Antennas
on 18 September 2023 are performing well with integrations
proceeding as expected.
With continuing good operating cash flow, gearing(4) at 30
September 2023 was 1.6x, the lower end of the Group's target
gearing range of 1.5x to 2.0x.
Outlook
Following a strong performance in the Period and with good
orderbook visibility into the second half, the Group is on track to
deliver full year underlying earnings in-line with the Board's
recently upgraded expectations.
With a clear strategy focused on structural and sustainable
international growth, a diversified customer base, a healthy order
book and pipeline of design wins and acquisition opportunities, the
Group has a resilient business model that, despite varied market
conditions, is well positioned to make further good progress on its
key priorities.
The Group will release its interim results on 5 December
2023.
For further information, please contact:
discoverIE Group plc 01483 544 500
Nick Jefferies Group Chief Executive
Simon Gibbins Group Finance Director
Lili Huang Head of Investor Relations
Buchanan 020 7466 5000
Chris Lane, Toto Berger, Jack Devoy
discoverIE@buchanan.uk.com
Notes
1. Growth rates refer to the comparable prior year period unless stated.
2. Growth rates at constant exchange rates ("CER"). In
calculating CER f or the Period, the average Sterling rate of
exchange weakened 2% against the Euro while strengthening 3%
against the US Dollar compared with the average rates for last year
and 9% on average against the three Nordic currencies.
3. Organic growth for the Group compared with last year is
calculated at CER and is shown excluding the first 12 months of
acquisitions post completion (CDT in June 2022, Magnasphere in
January 2023, Silvertel in August 2023 and 2J in September 2023)
.
4. Gearing is defined as net debt divided by underlying EBITDA
(excluding IFRS 16, annualised for acquisitions).
5. This trading update is based upon unaudited management
accounts and has been prepared solely to provide additional
information on trading to the shareholders of discoverIE Group plc.
It should not be relied on by any other party for other purposes.
Certain statements made in this update are forward looking
statements. Such statements have been made by the Directors in good
faith using information available up until the date that they
approved this update. Forward looking statements should be regarded
with caution because of the inherent uncertainties in economic
trends and business risks.
Notes to Editors:
discoverIE Group plc is an international group of businesses
that design and manufacture innovative electronic components for
industrial applications.
The Group provides application-specific components to original
equipment manufacturers ("OEMs") internationally through its two
divisions, Magnetics & Controls, and Sensing &
Connectivity. By designing components that meet customers' unique
requirements, which are then manufactured and supplied throughout
the life of their production, a high level of repeating revenue is
generated with long-term customer relationships.
With a focus on sustainable key markets driven by structural
growth and increasing electronic content, namely renewable energy,
medical, electrification of transportation, and industrial
automation & connectivity, the Group aims to achieve organic
growth that is well ahead of GDP and to supplement that with
complementary acquisitions. The Group is committed to reducing the
impact of its operations on the environment with an SBTi aligned
plan to reach net zero. With its key markets aligned with a
sustainable future, the Group has been awarded an ESG "AA" rating
by MSCI and is Regional (Europe) Top Rated by Sustainalytics.
The Group employs c.4,900 people across 20 countries with its
principal operating units located in Continental Europe, the UK,
China, Sri Lanka, India and North America.
discoverIE is listed on the Main Market of the London Stock
Exchange and is a member of the FTSE250, classified within the
Electrical Components and Equipment subsector.
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END
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October 11, 2023 02:00 ET (06:00 GMT)
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