discoverIE Group PLC, a designer and manufacturer of customised electronics, said it is on course to deliver full-year underlying earnings in line with its recently upgraded expectations.
In a first-half trading update, the group reported a 4% increase in sales at constant exchange rates compared to the previous year. This growth comprises 1% organic growth and 3% attributed to acquisitions.
After accounting for foreign exchange effects of 3%, the reported sales were 1% higher than last year. Notably, sales in the Magnetics & Controls division grew by 2% organically, while the Sensing & Connectivity division saw a 1% organic increase.
discoverIE's diversified focus on four target markets — renewable energy, electrification of transportation, medical, and industrial, and connectivity — has contributed to resilient demand and sustained positive trading momentum.
Orders in the second quarter rose by 2% sequentially, and the book-to-bill ratio improved from 0.84 in Q1 to 0.91 in Q2. The order book as of 30 September provides over five months of coverage, offering good visibility for the second half.
Operating margins are expected to strengthen by approximately 100 basis points year on year, thanks to a combination of improved sales mix and cost-efficiency measures.
This progress puts the group well on its way to achieving its FY25 target margin of 13.5% and a mid-term target of 15%. The margin gains are expected to more than offset rising interest charges and foreign exchange impacts, setting the stage for record underlying earnings per share for the period.
Design wins, a crucial driver for future organic revenues, surged by 23% in the period, boasting an estimated lifetime value of £190 million.
A total of 89% of these wins are in the group's target growth markets. The recent acquisitions of Silvertel on 31 August and 2J Antennas on 18 September are performing well, with integrations proceeding as planned.
discoverIE's gearing as of 30 September stood at 1.6x, comfortably within its target range of 1.5x to 2.0x.
"With a clear strategy focused on structural and sustainable international growth, a diversified customer base, a healthy order book and a 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," investors were told.