LONDON: Diploma PLC, the FTSE 100-listed value-add distribution group, has reported robust half-year results for the six months ended 31 March 2025, prompting an upgrade to its full-year guidance. The company cited strong organic growth, disciplined cost management, and accretive acquisitions as key drivers behind the positive performance.
Financial Highlights
– Revenue: £728.5 million, up 14% year-on-year (H1 2024: £638.3 million).
– Organic Revenue Growth: 9%, up from 5% in H1 2024.
– Adjusted Operating Profit: £156.9 million, a 25% increase (H1 2024: £125.4 million).
– Adjusted Operating Margin: Improved by 190 basis points to 21.5%.
– Adjusted EPS: 80.2p, up 23% (H1 2024: 65.1p).
– Free Cash Flow: £83.8 million, up 26%.
– Interim Dividend: Increased by 5% to 18.2p per share.
Sector Performance
Controls (+16% Organic Growth)
The Controls sector delivered exceptional results, driven by structural tailwinds in aerospace, defence, and datacentres. Windy City Wire achieved double-digit growth, while Peerless, acquired in May 2024, exceeded a 20% return on capital in its first year under Diploma’s ownership.
Seals (0% Organic Growth)
Despite challenging market conditions, the Seals sector demonstrated resilience. North America showed positive momentum, while International Seals is expected to improve in the second half following strategic investments in talent and technology.
Life Sciences (+6% Organic Growth)
The Life Sciences sector continued its strong performance, with market share gains in medtech and in vitro diagnostics (IVD). North America and Australasia led growth, while Europe saw flat revenue due to a strategic product portfolio rationalisation.
Upgraded Full-Year Guidance
Buoyed by the strong first-half performance, Diploma has upgraded its FY25 guidance:
– Organic Revenue Growth: 8% (up from 6%).
– Adjusted Operating Margin: Approximately 22% (up from ~21%).
Johnny Thomson, Chief Executive Officer, commented: “Our results reflect the strength of our diversified business model and disciplined execution. Despite macroeconomic uncertainties, we are confident in delivering on our upgraded guidance and excited about our long-term prospects.”
Strategic Focus
Organic Growth & Acquisitions
Diploma remains committed to driving organic growth through market expansion and product range extensions. The company also continues to pursue disciplined acquisitions, with a healthy pipeline weighted towards the US. Since 2019, Diploma has invested £1.3 billion in 42 acquisitions, enhancing its portfolio and driving shareholder value.
Scaling & Investment
The Group is investing in scaling operations, including talent development, system upgrades, and facility enhancements. These initiatives aim to bolster efficiency and support sustainable growth.
Outlook & Risks
Diploma’s diversified portfolio and localised supply chains provide resilience against global disruptions, including tariff impacts. However, the company remains vigilant on risks such as:
– Talent Retention: Ensuring high-performing teams.
– Cybersecurity: Protecting against potential threats.
– Geopolitical Uncertainty: Managing supply chain and trade risks.
While Diploma is well-positioned for continued growth, the company acknowledges risks from exchange rate fluctuations, economic conditions, and market disruptions. However, its strong balance sheet, cash conversion, and strategic investments underpin confidence in sustained performance.