discoverIE Group PLC (LON:DSCV) has delivered a 22% rise in first-half profits as its target markets continued to grow their share of its revenue stream.
For the six months ended 30 September, the customised electronics maker delivered an underlying operating profit of £17.7mln, 22% higher than the prior year, while revenues climbed 10% to £232mln.
The growth in profits was boosted by an increase in operating margins to 7.6% from 6.8% a year ago, while the company also increased its share of non-European sales to 24% from 20% previously.
Design & Manufacturing, the company’s largest division accounting for 63% of sales, also saw 7% organic growth in the period.
As a result of the improved performance, the group’s interim dividend was raised by 6% to 2.97p per share.
Looking ahead, discoverIE said it had achieved a record order book at the end of the first half of £153mln, 15% higher year-on-year, while orders into the second half of the year had continued to be ahead of sales.
In a statement, Nick Jefferies, the group’s chief executive, said the group’s target markets were now generating two-thirds of revenue, up from less than half three years ago, and that the group was “on track to deliver full-year earnings in line with our expectations”.
Brokers hike target prices
Following the results, discoverIE’s house broker Peel Hunt hiked their target price for the group to 650p from 530p and retained their ‘buy’ rating, saying the company was continuing to deliver steady growth despite what it said were “very mixed end markets”.
“These results, delivered against tough market conditions, demonstrate the extent to which the strategy has matured and the model has been proven and they place discoverIE alongside a small handful of names in the sector that have shown high levels of resilience in these markets”, said analysts.
Meanwhile, fellow broker finnCap also increased their target price on the group, albeit to a slightly lower 579p from 535p.
Analysts echoed Peel Hunt’s sentiments on the company’s growth, saying it was “very well placed to further progress its growth track record despite more short-term economic caution generally”.
In mid-morning trading, discoverIE's shares were 2.5% lower at 526.6p.
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