21 JULY 2022
DIPLOMA PLC
STRONG Q3 PERFORMANCE, CONFIDENT IN FULL YEAR GUIDANCE
Diploma PLC, the international group distributing specialised products and services, today issues a trading update for the nine months ended 30 June 2022.
Year to date performance
Performance in the third quarter has remained strong with organic growth of 13%. We continue to focus on revenue diversification activity to drive growth, build scale and increase resilience. We drive this diversification by positioning behind structurally growing end markets, further penetrating core developed economies and extending product ranges to expand addressable markets.
|
· |
Organic revenue growth was 15% driven by our organic revenue initiatives, continuing positive demand and pricing: o Controls: acceleration at International Controls and continued strong volume growth at Windy City Wire. o Seals: sustained market share gains in North American Aftermarket and broad-based growth at International Seals against a robust comparator. o o Life Sciences: as expected, impacted by one-off COVID-related revenues in the prior year. Remain confident in a return to growth during H2. |
|
· |
The impact of the pass through of higher copper prices has moderated during Q3 against a higher comparator, contributing ca. 3% to organic growth in the year to date. |
|
· |
Reported revenue growth was 26%, reflecting a positive contribution from high quality acquisitions and a ca. 2% foreign exchange tailwind |
|
· |
Strategically important acquisitions completed in Q3 will accelerate future organic growth in key business lines: o R&G Fluid Power Group: successfully delivering on its organic and inorganic growth strategy, including two small bolt-on acquisitions for a total consideration of ca. £4 million. o o Accuscience: exciting prospects, particularly in the high growth diagnostics segment. |
|
· |
We remain disciplined in our approach to acquisitions and our pipeline is encouraging. |
|
· |
Our operating margin performance continues to be strong, demonstrating the power of our value-added service model which drives customer loyalty and pricing power. We continue to successfully manage supply chain pressures, tight labour markets and inflation. |
During the first nine months of FY 2022:
Full year outlook positive and unchanged
|
· |
Low double digit organic revenue growth. |
|
· |
Reported revenue growth a little over 20%. |
|
· |
Operating margin at the top end of the 18-19% guidance range. |
|
· |
Strong cash generation currently expected to result in net debt/EBITDA of ca. 1.5x by year end. |
The Group's performance in the first nine months of FY 2022 means we are confident in delivering our full year guidance:
Whilst the wider macroeconomic outlook is uncertain, the Group's resilience is supported by our increasing revenue diversification, our value-added model, and strong cash generation and balance sheet. We remain focused on executing our strategy of building high-quality, scalable businesses for organic growth and are confident in our long-term prospects.
Our next scheduled update will be the publication of our full year results on 21 November 2022.
Johnny Thomson, Chief Executive Officer, and Barbara Gibbes, Chief Financial Officer, will host a conference call for analysts and investors this morning at 8:30am (UK time). Conference call dial in details:
- Dial in: +44 (0)330 165 4012
- Participant access code: 6981796
A recording of the call will be made available on the website later in the day or can be requested by contacting investors@diplomaplc.com