Oxford Instruments higher as it posts full-year profit rise, but new orders hit by coronavirus
For the year ended 31 March, the FTSE 250 reported an adjusted pre-tax profit of £49.5mln, up 8.8% on the prior year, while revenues rose 1.1% to £317.4mln.
Orders in the year were 0.3% higher at £336mln, while the order book increased 14.2% to £175mln, assisted by finished goods that were not shipped at the end of the year.
The company also said it will defer its decision to pay a dividend as a result of the “continued uncertainty” surrounding the pandemic and reassess the decision based on its performance in the coming year.
Looking ahead, the group’s chief executive Ian Barkshire said the first two months of its current year had seen the pandemic impact trading, with cumulative orders 3% below the year ago period as 19% growth in Asia offset a 23% and 7% decline in Europe and North America respectively.
The CEO also said a “strong uplift” in orders for the company’s compound semiconductor process solutions had offset lower orders for its higher-margin scientific cameras and optical microscopy products, both of which had been “severely impacted by disruption across academic customers.
However, Barkshire said revenues were still 3% above the prior year due to the delivery of shipments held over from the prior year.
“We have an active pipeline of sales opportunities, reinforced by our digital marketing and online sales presence; but activity levels within academic institutions remain low due to continued customer site closures”, the CEO said.
“It will take some time to understand the impact and longevity of this disruption, and we will continue to take measures to adapt and protect our business throughout this period. Once we have attained an improved level of visibility, we will be in a position to provide guidance on the current year’s expected financial outcomes”, he added.
In a note on Tuesday, analysts at Peel Hunt upped their target price on the firm to 1,400p from 1,200p and retained their ‘buy’ rating, saying that going forward they will be “watching closely for the re-opening of universities and academic institutions”, both of which were important for its higher-margin scientific cameras and optical microscopy products.
“Oxford Instruments is an excellent business that is continuing to improve fundamentally…Its relatively flexible cost base and strong balance sheet mean we are confident that it will weather the storm and come out well the other side”, the broker added.
Shares in the company were 2.6% higher at 1,290.4p in mid-morning trading.
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