Delays in aerospace and defence work masked the progress made in the other divisions of photonics company Gooch & Housego (LON: GHH) although margins have come under pressure.
In the year to September 2022, the AIM-quoted company’s revenues were flat at £124.8m. Currency movements stopped revenues from declining. Underlying pre-tax fell by just over one-third to £8.1m, as aerospace and defence went from profit to loss. The total dividend is 12.6p a share.
The restructuring of manufacturing facilities is well on the way to completion and contract manufacturing of more standard photonics products is being ramped up. There were restructuring charges of £1.6m in the period and there should be a much lower charge this year.
Higher inventories mean that net debt more than doubled to £19.1m. Supply chain problems continue, and they may not ease significantly in the near-term.
Director buying
New chief executive Charlie Peppiatt bought an initial 5,000 shares at 417p each. Chairman Gary Bullard and associated party acquired 7,564 shares at 399p each and 7,500 shares at 405p each. The share price ended the day at 426p.
Investment in the business and R&D will hold back the profit recovery this year, although aerospace and defence revenues should improve. There is a record order book of £147.7m.
finnCap forecasts a partial recovery in profit tax profit to £9.3m in 2022-23, rising to £11.8m in 2023-24. The shares are trading on less than 15 times prospective 2022-23 earnings, falling to 12 the following year.
Gooch & Housego has previously had a higher rating because of its technology expertise and potential for growth. There is substantial recovery potential at this share price.