Diploma shares hit record high as technical products firm ups guidance
- The FTSE 100 group’s products include cables, fasteners and hydraulic seals
Diploma shares hit a record high on Tuesday after the FTSE 100-listed technical products supplier upgraded its annual guidance.
The FTSE 100 group, whose products include cables, fasteners and hydraulic seals, now expects to achieve organic revenue growth of 8 per cent this year, up from a prior prediction of 6 per cent.
It also raised its full-year operating margin forecast from around 21 per cent to about 22 per cent.
Shares in Diploma soared 18 per cent to a record £49.90 in early trading before retreating to be 14.7 per cent up by late Tuesday afternoon.
Diploma’s new outlook follows a bumper first-half performance, with the firm’s sales expanding by 14 per cent to £728.5million in the six months ending March.
Growth was driven by its controls segment, which saw organic revenue jump by 16 per cent and total turnover surge by over a third to £391.3million.
Manufacturer: Diploma makes products including cables, fasteners and hydraulic seals
The London-based business noted that its Windy City Wire segment enjoyed greater demand for its digital antenna systems and data centres, as well as increased sales in its core building markets.
At the same time, Diploma said its international controls arm benefited from tailwinds in established markets, such as energy and defence, and the takeover of aerospace parts manufacturer Peerless.
In contrast, sales in its seals division fell by 6 per cent to £226.7million, partly due to a halt in government infrastructure projects hitting purchases of hydraulic components at R&G, its UK fluid power business.
However, the company’s total adjusted operating profits still climbed by a quarter to £156.9million, supported by a 190 basis points improvement in operating margins.
Johnny Thomson, chief executive of Diploma, said the performance demonstrated ‘our sustainable quality compounding with excellent earnings growth at fantastic returns on capital’.
He added: ‘We have a differentiated business model with a well-diversified portfolio of high-quality businesses, allowing us to deliver compounding growth in good times and bad.’
Diploma also said recently-imposed tariffs had a ‘limited impact’ because a large share of its goods are locally sourced.
Since returning to office in January, President Donald Trump has put a 10 per cent baseline tariff on imported US goods, and 25 per cent taxes on cars, steel, and aluminium entering the US.
Trump gradually raised tariffs on most Chinese products to a whopping 145 per cent, but the US and China agreed last week to drop their respective tariffs on each other to 30 per cent for 90 days.
Thomson said: ‘Despite the uncertain environment, I feel confident in our ability to deliver on our upgraded guidance this year. And I’m really excited about our longer-term prospects too.’
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