- Margin up despite dip in sales
- Record earnings per share
- Five-year margin target raised
Electronic component-maker discoverIE Group (DSCV) surprised analysts and investors in a good way with a strong set of results for the year to March and an increase in its medium-term margin guidance.
The shares gained as much as 82p or 13% to a three-month high of 715p, taking them to the top of the FTSE 250 leader board.
BOTTOM-LINE BEAT
Guildford-based discoverIE makes customised electronic components for use in the industrial, medical, security, telecoms and transport sectors, as well as in renewable energy.
Importantly, the firm focuses on markets which are aligned with the UN’s SDGs (sustainable development goals), which makes it a popular holding with funds with a bias towards renewable energy and/or ethical investing.
For the year to March 2025, the company posted a 7% drop in organic sales to £423 million as customers ran down their inventories, although there was a marked improvement in the second half of the year with sales down 4% against a 10% decline in the first half.
Orders returned to growth, with a 12% improvement in Sensing & Connectivity, and Q4 saw a pick-up with Magnetics & Controls also seeing an increase in bookings.
The adjusted operating margin increased by a better-than-expected 120 basis points or 1.2% to 14.3%, leading to record EPS (earnings per share) of 38.7p, also ahead of expectations.
RAISED MARGIN TARGET
The firm raised its medium-term operating margin target from 15% by 2027/28 to 17% by 2029/30 citing strong growth drivers in its key markets, in particular security, its acquisition pipeline and lower interest rates going forward.
Chief executive Nick Jefferies, who has steered the group for the last 15 years-plus, flagged the group’s ability to protect its profitability despite lower sales and its 10-year record of improved operating margins.
‘We see the potential to deliver further manufacturing efficiencies and commercial synergies and have upgraded our five-year operating margin target to 17%,’ confirmed Jefferies.
