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Gooch & Housego boosted by fast-growing order book

28 Nov 2017

Chairman Gareth Jones hails company's 'strongest ever' position as stock price approaches record high.

Gooch & Housego (G&H) has reported sharp growth in sales, profits and orders in its latest financial results, with CEO Mark Webster declaring 2017 as a “watershed year” for the UK-headquartered optics and photonics company.

In its preliminary results for the year ending September 30, G&H posted record-breaking sales of £112 million – up 30 per cent on the 2016 figure of £86.1 million and passing £100 million for the first time in the firm’s history.

While that top-line figure has been skewed upwards partly by currency fluctuations, Webster and colleagues can also point to rising profits and fast-growing orders as further evidence of the company’s progress.

Standing at £72.1 million as of September 30, orders were up more than 36 per cent on the 2016 figure – which was itself a record.

Unprecedented demand
In the company’s official statement to the London Stock Exchange (LSE), where G&H is listed on the Alternative Investment Market (AIM), former CEO and current chairman Gareth Jones wrote: “Gooch & Housego is stronger today than at any time in its past.”

Jones noted that demand from the microelectronics and optical telecommunications markets had reached “unprecedented levels” during the latest financial year, putting pressure on some of the firm’s manufacturing operations and lead times.

He added that investment in both personnel and new manufacturing equipment had begun to reduce product lead times towards the end of the reported period.

Although the industrial sector still accounted for just over 57 per cent of G&H turnover in the latest financial year, with much of the recent sales boom prompted by demand from the microelectronics sector, the company does now appear to be diversifying its applications base successfully.

At £34.9 million, sales into aerospace and defense applications were up 75 per cent year-on-year. Webster pointed to a “technological revolution” in space satellite communications as a key trend here, as lasers more typically associated with terrestrial fiber-optic systems are increasingly deployed in orbit.

“The investment we have made in this area means we are at the forefront of some of these developments,” noted the CEO. In a G&H blog post earlier this year, Efstratios Kehayas outlined the company's efforts in space communications - including development of various high-reliability photonic components.

Life sciences
Sales into G&H’s other target market sector – life sciences – have risen at a slower rate, but at £9.6 million were still up nearly 10 per cent on the prior year. Key applications here include optical coherence tomography (OCT), laser surgery and microscopy, with Webster writing:

“Despite the increase in revenue the [life sciences] profit did decline year on year, which is primarily due to the investments made into future capabilities. Though life sciences is a relatively small sector for G&H, we see this as a strategically important one going forward.

“There is potential for photonic technology to be used in minimally invasive surgery, endoscopy and robotic surgery and this sector remains an area where G&H will continue to invest in research and development and look for strategic acquisitions.”

In his outlook for the current financial year, the CEO added that G&H was committed to making further investment in research and development in the company’s targeted high-growth areas.

These include fiber and solid-state laser systems, precision inspection equipment for microelectronic manufacturing, OCT, laser surgery, satellite communications, aerospace and defense subsystems, and fiber-optic sensing systems.

Webster also noted that further investment would be focused on “a few” high-return research projects, alongside continued improvements to operational efficiency. That focus has already seen the company’s ten manufacturing sites organized into three “centers”, based around the key areas of acousto/electro-optics, precision optics, and fiber optics.

• Investors reacted positively to the latest G&H results, with the company’s stock price nudging higher to trade at just over £14.00 on the LSE. Though not quite eclipsing the all-time high of £14.60 touched in June, the current price represents close to a 50 per cent rise over the past 12 months.

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