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Diploma reports rise in first-half profits despite currency headwinds

The FTSE 250 technical products and service group saw its pre-tax profits rise 8% to £35.4mln from £32.9mln in the same period last year

Manufacturing
The firm also hiked its interim dividend by 10% to 7.7p

Diploma PLC (LON:DPLM) has posted a rise in profits for the first half of the year as revenue growth offset a headwind from foreign currency exchanges.

The FTSE 250 technical products and service group saw its pre-tax profits rise 8% to £35.4mln from £32.9mln in the same period last year, while revenues grew 8% to £234.9mln from £217.3mln previously.

READ: Diploma predicts strong revenue growth in upcoming half-year results

The firm also hiked its interim dividend by 10% to 7.7p, compared to 7p last year.

In its divisions, Life Sciences grew by 9% following a strong performance from its healthcare business and growth in consumable product sales, while the Seals division expanded by 9% after strong revenues in the North American aftermarket and industrial original equipment manufacturer (OEM) businesses and growth in international markets.

In the Controls division, underlying revenues expanded by 3%, slowed by a strong comparative from the previous year.

The results will come as little surprise to the markets following a trading update in March when the group said it expected half-year revenues to grow around 8% despite a 4% currency headwind from a stronger pound.

In the company outlook, chief executive Richard Ingram said the group would make further progress and was hoping to complete several acquisitions currently in its opportunity pipeline before the end of the year.

He added: "Diploma has continued to deliver robust growth in revenues and earnings. During the first half of the year the Group's businesses have taken advantage of the continuing strong global trading environment and delivered a good performance despite currency headwinds.”

In a note to clients, analysts at city broker Peel Hunt upped their target price for the firm to 1,300p and retained an ‘Add’ rating, commenting: “This is a solid set of results and whilst it could be argued they are slightly ahead of where we are on some metrics we are leaving our forecasts unchanged at this stage (PHe adj PBT is £82.5m vs consensus £82.4m).

They added: “However, the positive trading has continued since March and our confidence in H2 and the risk of upgrades is higher, and we also note that there has been some improvement in visibility on acquisition activity in H2.”

In late morning trading Monday, Diploma shares were up 0.3% at 1,245p.

--Adds broker comment and updates share price--

Quick facts: Diploma PLC

Price: 1693 GBX

LSE:DPLM
Market: LSE
Market Cap: £1.92 billion
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