- Organic growth target raised
- Operating margin confirmed
- Entry into new specialty market
It’s a case of déjà vu for shareholders in specialist distribution group Diploma (DPLM) with the firm raising its outlook once again, sending its shares to the top of the FTSE 100 leaderboard and fresh all-time highs.
After opening up 620p or more than 12%, by mid-morning the shares were trading at £52.86 up 382p or 8% on the previous day.
SHORT AND SWEET
In a third-quarter trading update which was notable not just for its positivity but also its briefness, Diploma said its recent performance had been ‘strong’ with 10% organic revenue growth over the nine months to June.
Therefore, it has upgraded its full-year organic growth target from 8% to 10%, the second increase this year, while maintaining its 22% operating margin guidance.
In addition, the firm has made two ‘quality’ acquisitions this year, a Danish seals business and a UK in vitro diagnostics company, signalling its entry into a new market.
SMART ACQUIRER
In May last year, Diploma blew away forecasts for first-half profits thanks to strong organic growth and it announced it had made six acquisitions to further bolster growth.
One of these was US-based Peerless Aerospace Fastener, which cost £236 million but was forecast to deliver an 8% increase in group profits in its first year.
Scroll forward to May this year and the firm reported a 14% increase in first-half revenue, driven by 9% organic growth at the group level and 16% in Controls, where the firm said Peerless had ‘excelled’.
