Bosses at tech components company Gooch and Housego (G&H) have said they expect profits for this year to be ahead of expectations after “strong” trading in the second half.
The AIM-listed firm, which makes photonic systems used in the aerospace and defence sectors as well as for scientific research, said “momentum was sustained”, after it reported revenue of £71.3m and a statutory pre-tax profit of £3.3m during the first six months of its current financial year.
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The business, which has its global headquarters in Somerset, said volumes of its parts used in advanced lithography systems grew more than offsetting the effects of some de-stocking by its customers in industrial laser markets.
The board said G&H had made “good progress” with its embedded imaging periscope systems, which it said had the potential to unlock “significant orders” based on its forecasts. Revenues from medical diagnostic devices also grew as clients started new programmes over the last six months.
G&H said its performance had been enhanced by “operational improvements and capability investment” over the last year, as it looked to reduce lead times after increasing production capacity.
Bosses said the integration of two acquisitions it had made during the period were “proceeding to plan”. In June the 75-year-old business bought US-based GS Optics in a deal worth up to $15.7m (£12.9m), and in July it snapped up Plymouth-based coatings company Artemis for £8.9m.
G&H said its medical diagnostic devices business ITL had been relocated to GS Optics’ facility in Rochester, New York, as part of expansion plans for the site, where it plans to grow its engineering and manufacturing workforce.
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The group said “strong” cash generation during the second half had allowed it to reduce its borrowing by $5.5m (£4.5m) from the level immediately following the completion of its two purchases.
G&H’s order book stood at £124.9m at the end of September, marginally up from the first half of the year but down from £147.7m recorded at the end of September 2022. Around 75% of its order book is for work set for delivery in FY2024, which bosses said would provide “a good underpin” for trading in the new financial year.
Chief executive Charlie Peppiatt said: "I am delighted with the positive progress the group has made in FY2023. Our operational performance has shown sustained improvement with on time delivery and lead times both improving significantly.
"The integration of GS Optics and Artemis into the G&H Group is on track. Both businesses are already benefiting from the additional market access and investment that being part of G&H brings. The detailed activities supporting the delivery of our recently announced strategic plan are now in place and support our budgeted plans for FY2024."
G&H will announce audited results for its full financial year on December 5.
In its last financial year, G&H reported revenue of £124.8m and made an adjusted pre-tax profit of £8.1m, down from £12.6m in 2021, with the firm saying recruitment and supply chain challenges had "constrained" its output.
In an earlier trading update in April the business said its rising revenue had been driven by the effects of price increases to offset inflated input costs from its supply chain.
Founded in Ilminster in 1948, G&H has a total of nine manufacturing sites in the 海角视频, US and China, with sales offices in France, Germany, Hong Kong, Japan, South Korea and Singapore.