Diploma confident despite challenging environment

13th May 2013 08:53

Specialised technical products and services provider Diploma delivered increased earnings and said it is confident of progress in the second half despite persistently subdued European markets.Pre-tax profit rose to £23.8m for the six months ended March 31st 2013 from £23.3m a year earlier while revenue increased by 10% to £139.7m following a strong performance from Life Sciences, particularly in the Healthcare businesses. Underlying revenue increased 2%, after adjusting for currency effects and acquisitions. Adjusted operating margin reduced to 19.3%, in line with expectations and reflecting impact of Investment for Growth programme. Diploma said it saw modest underlying growth in the Seals businesses against strong prior year comparatives. Challenging conditions for the European Controls businesses led to a small reduction in underlying revenues.Commenting on the results, Chief Executive Bruce Thompson said: "Whilst the macroeconomic backdrop remains challenging, particularly in Europe, the group has a resilient business model."He added: "The pipeline of acquisition opportunities remains promising and is growing with the additional resources, although the current uncertain economic background has lengthened transaction processes and is delaying completion of target acquisitions."Nevertheless Diploma said it remains confident that despite the challenging economic environment, the investments being made in the business, both organically and by acquisition, is expected to fuel growth in the second half of the year and in the longer term.The group saw positive contributions from recent acquisitions; in Seals, from J Royal in the US, in Controls, from Amfast and Abbeychart in the UK and in Life Sciences, from DSL in Australia. The interim dividend has been increased by 19% to 5.0p per share after the board decided to increase the interim dividend as a proportion of the total dividend.Diploma's shares fell 2% to 587.50p at 09:30 in London. CJ