Gooch & Housego shares slide despite higher H1 revenue, profit

(Sharecast News) - Gooch & Housego shares fell on Tuesday despite the company reporting higher first-half revenue and profits, as investors looked past strong aerospace and defence demand and a record order book to focus on continued disruption in Life Sciences, increased debt and working capital pressures.

The AIM-traded specialist optical components and systems manufacturer said revenue for the six months ended 31 March rose 15.5% to £81.9m from £70.9m a year earlier, or 9.1% on an organic constant-currency basis.

Adjusted profit before tax increased 13.9% to £5.8m from £5.1m, while adjusted basic earnings per share rose 9.3% to 16.4p.

Statutory profit before tax grew 15.8% to £3.3m, and statutory basic earnings per share rose to 9.2p from 8.1p.

Adjusted operating profit increased 16.9% to £7.2m, with the adjusted operating margin edging up to 8.8% from 8.7%.

Reported operating profit rose to £4.9m from £4.2m.

Revenue in aerospace and defence rose 51.7% to £35.6m, or 26.0% on an organic constant-currency basis, reflecting strong demand, operational improvements, enhanced germanium processing capabilities and the benefits of recent acquisitions.

The segment generated adjusted operating profit of £3.6m, compared with £0.6m a year earlier.

Industrial revenue was broadly flat at £30.3m, rising 4.6% organically at constant currency, with Gooch & Housego pointing to improving demand in industrial lasers and semiconductor markets, as well as continued strength in subsea data cable demand.

Life Sciences revenue fell 7.7%, however, to £16.0m, reflecting customer phasing in medical diagnostics and materials availability issues affecting Pockels Cells production, although production improved in the second quarter after alternative suppliers were qualified.

Chief executive Charlie Peppiatt said the group had made "positive progress" in the first half, with record order book growth demonstrating increased customer confidence in G&H's ability to provide complex photonics and optical systems.

"This enlarged order book gives us stronger forward visibility than we have had historically and reflects the benefits of our strengthened positions in structurally attractive end-markets," he said.

The order book rose to a record £167.3m from £142.4m at the end of September, up 16.5% on an organic constant-currency basis, giving near full cover for expected 2026 revenue.

Gooch & Housego said order growth was broad-based, with particularly strong aerospace and defence demand, improving industrial orders and continuing Life Sciences disruption from customer phasing and legacy product transition activity.

Net debt excluding IFRS 16 increased to £36.6m from £24.1m a year earlier, while net debt including IFRS 16 rose to £49.8m from £35.5m.

The group said leverage was 1.5 times at the period end, compared with 1.3 times at 30 September, and that its committed revolving credit facility had been increased to $70m.

Net cash generated from operations rose to £3.9m from £2.6m, although working capital increased by £4.9m from the 2025 year-end due to higher receivables following strong March invoicing and increased inventories, including higher stocks of germanium amid uncertainty over availability.

Gooch & Housego said the integration of Phoenix Optical and Global Photonics was now largely complete, with expanded capacity supporting customer demand.

Capital expenditure totalled £3.4m, including investment in a new clean room and optical systems assembly equipment at its Tampa, Florida facility, and additional fibre optic module production equipment in Torquay.

The board declared an unchanged interim dividend of 4.9p per share, payable on 24 July to shareholders on the register on 19 June.

Looking ahead, Gooch & Housego said its expectations for the 2026 financial year were unchanged.

It said it entered the second half with a record order book, near full revenue cover, strong aerospace and defence demand, improving industrial and semiconductor markets, and Life Sciences disruption expected to ease through the second half.

"While we continue to navigate the significant macroeconomic uncertainties, the recovery in our Industrial and Semiconductor markets, coupled with record demand from US and European Aerospace and Defence sectors, firmly supports our path to achieving mid-teens returns over the medium term," Peppiatt said.

At 0916 BST, shares in Gooch & Housego were down 12.75% at 984p.

Reporting by Josh White for Sharecast.com.

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