Photonics company Gooch & Housego (LON: GHH) had a better second half, but full year profit was still lower. The AIM-quoted company’s figures are expected to bounce back this year.
In the year to September 2024, revenues were 1% ahead at £136m. A decline in industrial revenues, due to weak product sales for semiconductor manufacturing and other industrial uses, was offset by higher aerospace and defence and life sciences revenues.
Underlying pre-tax profit slipped 22% to £8.1m. The total dividend was raised 1.5% to 13.2p, which is 1.9 times covered by earnings.
There is strong demand for the aerospace and defence division and orders already cover most of the expected revenues for this year. Phoenix Optical was acquired at the end of October. It has a factory in north Wales and supplies polished, coated and assembled precision optics and it will broaden the opportunities for the aerospace and defence division.
Net debt was reduced from £20.9m to £16m. That was before the acquisition of Phoenix Optical, where £3.4m was paid in cash and up to £3.35m is payable based on performance in the three years to June 2027. Net debt is still expected to fall to £15m by September 2025 and there is scope to fund further bolt-on acquisitions.
Although the year-end order book was weaker at £104.5m there is an upward trend, particularly for the aerospace and defence business. Destocking by industrial customers appears to be over and there is strong demand from the subsea market.
A recovery in pre-tax profit to £13.3m is forecast, rising to £17.8m next year. There is potential for continued improvement in margins. The share price improved 0.9% to 462p. The shares are trading on less than 12 times prospective earnings, falling to ten the following year.