Diploma boosts outlook after interim earnings surge

(Sharecast News) - Diploma boosted annual guidance for the second time on Tuesday, after the blue chip saw interim earnings rocket.

Organic revenues at the industrial group, which provides a range of critical products and services to customers in various markets, rose 15% in the six months to 31 March to £851.1m, while adjusted operating profits surged 33% to £208.9m.

Driving the growth was the controls business, Diploma's biggest division. It posted a 26% uplift in organic revenues to £495.3m, boosted by "favourable" market conditions across aerospace, defence and datacentres.

Revenues rose 2% in seals and by 4% in life sciences, to £224.9m and £130.9m respectively.

Looking to current trading, Diploma said it had entered the second half "with great momentum". Having upgraded guidance in March, it boosted it again, and is now forecasting annual organic growth of 12% on a constant currency basis, up from 9%, and operating profit growth of more than 30%.

Shares in Diploma spiked as trading got underway, putting on 7% at 7.070p by 0815 BST.

Chief executive Johnny Thomson said: "The strong first-half performance demonstrates how we balance ambitious earnings growth with disciplined returns, in good times and bad, to build on our long track record of sustainable quality compounding. We have strong positions in attractive, structurally-growing markets, and our acquisition pipeline is healthy.

"The second half has started well, and despite the uncertain environment, we're confident in our upgraded full-year guidance."

Diploma does not operate in regions directly impacted by the US-Iran war, though it noted it remained "alert to the wider implications across economies and markets we operate in".

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