Diploma shares top FTSE 100 gainers after company raises guidance
- The London-based group sells goods such as gaskets and industrial hoses
- It expects sales to rise 16% this fiscal year at constant exchange rates
Diploma shares were the biggest gainers in the FTSE 100 on Monday afternoon after the tech products supplier raised its annual guidance.
The company, which sells gaskets, cables and industrial hoses, now expects sales for the financial year to rise 16 percent at constant exchange rates, compared to 11 percent previously forecast.
Diploma also expects an operating margin of 20.5 percent thanks to recent acquisitions and ‘strong underlying performance’.
Forecast: Diploma, which sells gaskets, cables and industrial hoses, now expects its fiscal year sales to rise 16 percent at constant exchange rates
Following this announcement, Diploma’s share price rose 5 per cent to £40.98 early on Monday afternoon, making them the strongest FTSE 100 performer.
Over the past five years, the company’s shares have skyrocketed 170 percent thanks to continuously rising sales and profits.
In the six months ended March, the London-based company reported revenue rose 10 percent to £638.3 million, while adjusted operating profit rose 14 percent to £125.4 million.
Diploma was uniformly supported by acquisitions, especially within the seal sector division, and volume-driven organic growth.
It has bought six companies since September last year, including Plastic and Rubber Group, DICSA and US-based Peerless Aerospace Fastener, which was acquired for around £236 million.
Trading was further boosted by market share gains in the control division and a robust performance from the life sciences division in Canada and Australia.
Demand in the former market was supported by hospitals adopting technologies for use in urology, gynecology and endoscopy, while the latter market was driven by sales of genetic preconception screening.
Johnny Thomson, CEO of Diploma, said: “Our momentum is encouraging entering the second half, supporting our upgrade to full-year expectations.”
He added: ‘Diploma has a long track record of double-digit EPS (earnings per share) growth amid healthy returns. Our current performance and upgrade reaffirms our confidence in delivering long-lasting quality compounds.”
Russ Mould, investment director at AJ Bell, said: ‘Supplying widgets, cables and other tech items to keep factories and labs running may not get the pulse going, but it has an extreme long-term impact on the business. delivered strong returns.
‘Much of the recent growth has come from acquisitions – which may set off alarm bells – but crucially this has been a key part of Diploma’s successful strategy over a long period of time.’