Acal Plc (LON:ACL), the supplier of customised electronics, found a way to grow first half earnings, despite a difficult market environment.
Underlying profit before in the six months to the end of September rose 7% to £7.3mln from £6.8mln in the corresponding period of last year.
Nick Jefferies, the group’s chief executive, said Acal remains on track to hit full-year targets, thanks in part to helpful exchange rate movements, despite slower-than-expected organic growth in the first half.
Sales rose 10% to £156.7mln in the reporting period from £142.2mln the year before, but were up just 1% on a constant exchange rates basis. On a like-for-like (LFL) basis, sales were down 7% year-on-year, reflecting challenging trading conditions.
On the plus side, LFL orders rose 3% in the second quarter, and at the end of September the group boasted its highest ever period-end order book, at £94mln, leaving it well-positioned for future growth.
The interim dividend has been hiked 5% to 2.45p from 2.33p the year before, signalling confidence in the future.
“Orders continue to strengthen and we enter the second half with a record high period end order book,” Jefferies said.
The underlying operating margin rose to 5.6% from 5.4%, reflecting the focus on higher-margin products, particularly those generated by its Design & Manufacturing (D&M) division
“Margins remain robust, reflecting the strength of our value proposition, and we have taken decisive actions to make the group more efficient which will deliver benefits next year and beyond,” Jefferies told investors.
Strategic targets upgraded
The D&M division generated 52% of sales in the first half of the current financial year, up from 46% a year ago, and 86% of the group’s underlying profit (up from 75%); the target share of D&M sales had previously been 65% but given the progress made by this division, it has been increased to 75%, while the target underlying operating margin has increased to 8.5% from 7%; the target for internationalising the business beyond Western Europe has increased to 30% from 20%, the group revealed.
Speaking to Proactive Investors, Jefferies said: ''They're a good set of numbers. We're pleased with the outcome. It's been a fairy tricky first half, trading was difficult, organic growth was a bit lower than we had expected but conversely we benefited from the lower valuation of sterling.''
Shares in Acal rose 3.5% to 211.6p on the results.
In a separate announcement, the company said Malcolm Diamond is to succeed Richard Moon as chairman next year, on 1 April. Diamond currently non-executive chairman of Trifast PLC and Flowtech Fluidpower PLC, and has been a non-executive director of Acal for just over a year.