daily coverage of the optics & photonics industry and the markets that it serves
Featured Showcases
Photonics West Showcase
Business News

G&H profits as outsourcing strategy and acquisitions bear fruit

06 Dec 2023

London-listed firm benefiting from demand for military countermeasures and use of fiber-optic splitters in lithography tools.

G&H (Gooch & Housego), the UK-headquartered maker of photonic components and subsystems, has posted sales of £149 million for the year ending September 30 - up nearly 20 per cent on the prior year.

Though partly reflecting exchange rate fluctuations and the recent acquisition of both Artemis Optical and GS Optics, that increase in turnover - alongside some site rationalization - was enough to send the London-listed firm back into profit.

CEO Charlie Peppiatt, who instigated a wide-ranging strategic review of G&H’s operations and priorities earlier this year, revealed a statutory profit of £5 million for the year, in contrast with the £2.3 million loss posted a year ago.

“Having completed my first full year with G&H, I am pleased with the progress that has been made across the business through the collective hard work of the workforce harnessed more effectively through our new strategy that was launched in the summer,” he observed.

“Over the last year many of my first impressions have been confirmed, that G&H is a company with outstanding products, enormous technical capability and highly talented people that required greater focus on operational execution, customer experience, employee engagement and better prioritization of valuable R&D technology investment.”

Contract manufacturing
One of the outcomes of the strategic review has been a greater reliance on outsourcing the production of some key products to contract manufacturers in Thailand and the Czech Republic.

Peppiatt told an investor conference call that the aim was to pro-actively transition production to manufacturing partners at an earlier stage in the life cycle of certain products.

At the moment around 10 per cent of G&H sales are generated by outsourced production - largely acousto-optic products - but the aim is to increase that proportion to around 25 per cent in the future.

The CEO also highlighted what is expected to be a significant ramp in the production of high-reliability fused fiber-optic couplers next year, with their manufacturing now qualified at the Thailand-based contractor.

Those devices are used in sub-sea optical networks demanding faster communication speeds and greater complexity, with additional devices expected to move to contract production over the next couple of years.

Other recent developments have included the first deliveries of fiber-optic splitters used in cutting-edge lithography tools, as well as some next-generation design wins for G&H’s “Fiber-Q” coupled modulators.

Peppiatt also described the two recent acquisitions as a “great fit”, with GS Optics’ scalable precision polymer optics facility in Rochester, New York, now set to serve as the company’s main base for life science and biophotonics markets in the region.

Divisional demand trends
Meanwhile, Artemis’ expertise in optical coatings is finding use in Ukraine, where the Russian invasion has prompted increased demand for sighting systems offering robust laser protection.

“Lasers are in widespread use on the battlefield,” Peppiatt told investors, adding that G&H had developed a bespoke solution for battlefield safety and won a contract to supply the UK’s special forces with rifle-scope laser protection used in the new “KS-1” assault weapon.

Demand emanating from Ukraine was partly responsible for a 20 per cent year-on-year increase in sales for the company’s “aerospace and defense” unit, although the division still posted an operating loss of £2.9 million on sales of £38 million. Peppiatt and his team will be looking to improve those margins in the future, potentially aided by emerging demand for high-power laser weapons.

“Our teams have continued to work on directed energy systems with a number of prime contractor customers,” added the firm in its annual review. “G&H’s expertise in coating the large optics that are positioned at the heart of these systems means that we are well positioned to secure recurring production revenues once development activities are complete.”

G&H’s largest division by sales remains its industrial business, which delivered an operating profit of £9.3 million as sales tose to £77 million.

“Demand for our germanium acousto-optic modulator used in the Q-switching of solid-state lasers was particularly strong,” stated the firm, although some deliveries have since been paused as customers adjusted their inventory positions in response to what is typically a cyclical market.

Life sciences US expansion
Also in profit was G&H’s life sciences division, although at £3.2 million the latest operating surplus was slightly down despite a 6 per cent rise in sales to £33 million.

“We have invested into the GS Optics site in Rochester to establish our center of excellence for life sciences in North America,” G&H reported. “We will use the site to mirror many of the existing capabilities we have in Ashford, Kent, for the UK and European medical device market”

Ashford is home to G&H’s “ITL” division, which specializes in medical devices, including diagnostic tools. “We are growing our medical instrument design and development team at the Rochester location and are now able to offer our OEM medical device customers significantly more capacity for production build in the US than was previously the case,” stated the firm.

Looking ahead, Peppiatt said that while he remained optimistic there remained some significant challenges, notably hiring personnel in a highly competitive labor market, especially in engineering and technical positions.

“While mindful of the increasingly uncertain macroeconomic and geopolitical landscape, G&H remains well positioned for growth with a robust pipeline across all our end markets,” the CEO noted.

“The business will invest to ensure G&H can capitalize on the accelerating deployment of photonics technologies into continuously expanding areas of the industrial, life sciences, and aerospace and defence markets.”

Iridian Spectral TechnologiesCeNing Optics Co LtdECOPTIKPhoton Lines LtdMad City Labs, Inc.Hyperion OpticsTRIOPTICS GmbH
© 2024 SPIE Europe
Top of Page