Gooch & Housego PLC

("G&H" or the "Company" or the "Group")

Half Year Trading Update

"A record order book with output constraints"

Gooch & Housego PLC (AIM: GHH), the specialist manufacturer of photonic components & systems, provides an update on trading in the six months ended 31 March 2022.

Trading

In the first half of the financial year we have seen strong and sustained levels of overall demand and the Group has a record order book across all its principal areas of business, industrial lasers, telecoms, A&D and life sciences. There continues to be high demand for industrial lasers, especially for those used in semiconductor manufacturing where G&H has captured market share in a growing market. Medical lasers continue to benefit from the strong return of elective surgery and demand for our medical diagnostics has remained at a high level. We have recently secured important orders for our A&D business, including the supply of an upgraded optical imaging suite for a major UK A&D programme.  

As at 31 March 2022 our order book stood at a record £119.9 million (31 March 2021: £92.8 million), an increase of 29.1%, or 25.6% at constant currency, compared with the same time last year.

Throughout the first half of the financial year we have continued to invest in our commercial team, in an increasingly productive R&D group and in our manufacturing capacity in order to take advantage of strong and sustained demand for G&H's technologies and capabilities.

In line with our previous AGM trading update, announced on 23 February 2022, pandemic related factors have restrained output in the first half of our financial year. We are working hard to mitigate these factors and good progress has been made with recruitment and securing our supply chain, though COVID absences impacted our US sites earlier in the financial year and more recently our UK facilities have been affected.

The Group remains in a strong financial position with a robust balance sheet and low net debt. At the end of March we entered into a new credit facility ($40 million committed/ $30 million uncommitted) with our existing lender with a term that extends to April 2027.

Outlook

Despite a record order book pandemic related factors mean that first half revenue is expected to be circa £54.0 million (31 March 2021: £58.5 million). We continue to expect a higher second half weighting and the investment we have made in our manufacturing capacity and in improving our supply chain resilience will enable this step up in trading levels. We do not expect to be able to 'catch up' all of the first half revenue deficit in the second half of the current financial year and full year PBT is now forecast to be up to £2.5 million below management's previous expectations. This assumes that the impact the business has seen from COVID related absences in the first half of the financial year is not repeated in the second half.  

Fundamental demand for our photonic technologies and system capabilities remains strong and growing. We will continue to invest in the business in order to improve resilience to external factors so we can take full advantage of the outstanding opportunities in our target markets.   

Streamlining of our manufacturing

In the second quarter of the financial year our contract manufacturer in Southeast Asia has achieved the desired production line capacity and is now supplying the vast majority of our Acousto-Optic (AO) Q-switches to our industrial laser customers.

We will continue to review our higher volume, established products with a view to transferring them to our contract manufacturing partner. Our UK and US sites will focus on newer, innovative products that require higher local input from our engineering team.

Continued execution of our strategy

G&H remains committed to the long term goals of further diversification into A&D and life sciences and moving up the value chain. We intend to vigorously pursue these policies through internal investment and where appropriate, acquisitions.

Mark Webster, Chief Executive Officer of Gooch & Housego, commented:

"During the first half of the financial year we have seen strong demand for the Group's technologies and capabilities and our order book has achieved another record level. However like many industrial businesses our revenue has been held back by COVID related staff absences and supply chain disruption.

"We have been working hard to increase production capacity in areas of substantial demand and build resilience within our supply chain. As a result we expect trading levels to accelerate in the second half.

"With our innovative technologies and world leading products G&H is well positioned for longer term profitable growth."

The Company's Interim Results, for the six months ended 31 March 2022, are expected to be announced on Tuesday 7 June 2022.

Notes to editors

1.     Gooch & Housego is a photonics technology business headquartered in Ilminster, Somerset, UK with operations in the USA and Europe. A world leader in its field, the company researches, designs, engineers and manufactures advanced photonic systems, components and instrumentation for applications in the Aerospace & Defence, Industrial, Life Sciences and Scientific Research sectors. World leading design, development and manufacturing expertise is offered across a broad range of complementary technologies.

2.     All financial information included in this announcement is sourced from unaudited management accounts and excludes any specific items. This announcement contains certain forward-looking statements that are based on management's current expectations or beliefs as well as assumptions about future events.  These are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries and sectors in which G&H operates.  It is believed that the expectations reflected in these statements are reasonable but they may be affected by a wide range of variables which could cause actual results, and G&H's plans and objectives, to differ materially from those currently anticipated or implied in the forward-looking statements.  Investors should not place undue reliance on any such statements. Nothing in this announcement should be construed as a profit forecast.