discoverIE Group PLC (LSE:DSCV) said first-half earnings would match expectations as it reported strong operational cash flow and 'robust' margins.
In a trading update, investors were told destocking had slowed as the custom electronics group noted: "Order levels have stabilised and design wins, a key forward-looking barometer, increased strongly."
Although sales were down 4% compared to last year's period, the decline slowed as the period progressed.
Organic revenues in the second quarter dropped by 7%, an improvement from the 12% drop in the first quarter.
The group's strategy of focusing on operational improvements has helped maintain strong profit margins. The company is on track to meet its target of a 13.5% operating margin this year and 15% in the longer term.
Orders have shown positive momentum, growing by 8% compared to the previous year, indicating improving demand.
discoverIE also reported a significant rise in "design wins"—a key indicator of future sales potential—with an estimated value of £205 million, 33% higher than two years ago.
In the update, the market was told that HiVolt, the company's most recent acquisition was performing to plan, along with the other five purchases made in the last 14 months.
Gearing, at 1.45 times earnings (down from 1.5 times at the last report), is below the lower end of the company's 1.5-2 time range.
"With an excellent pipeline of design wins and acquisition opportunities supported by high cash flow, the group is well positioned to build on its strong through-cycle growth record and deliver on its strategic objectives as market conditions stabilise," discoverIE said.