Gooch & Housego profits drop by a third as pandemic hits demand and disrupts manufacturing

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Gooch & Housego PLC (LON:GHH) has reported a profit decline of over 30% as it said the coronavirus (COVID-19) pandemic had disrupted its manufacturing sites and resulted in lower demand in some sub-sectors for its optical systems products.

In results for the year to September 30, 29020, the AIM-listed firm reported an adjusted pre-tax profit of £9.8mln, down 35% year-on-year, while revenues fell 5.5% to £122.1mln. The total dividend for the year was also scrapped compared to an 11.5p per share payout in 2019.

Despite the profit decline and disruption, the company said actions from its management has contributed to a “stronger second half” and that overall demand for its products and capabilities had remained “robust” with medical diagnostics stronger while industrial lasers were “below ‘normalised’ levels”.

Gooch & Housego also noted that its year-end order book stood at £92.4mln, 0.8% higher than the same time last year, which it said reflected strong demand for fibre optics, hi-reliability fibre couplers and its aerospace & defence and life science capabilities.

Looking ahead, the company said despite “significant global uncertainty” due to the pandemic, all of its manufacturing sites in the UK, US and China were open and able to operate at full capacity while it also had a “strong balance sheet” having improved its liquidity levels.

Gooch & Housego also said its new products have delivered a “record contribution” in the year and that it will “continue to invest in those areas identified as delivering the highest return for our photonic technologies and system capabilities”.

“Subject to the short term global economic environment, the Board remains confident that G&H is well-positioned to deliver material progress in [the 2021 financial year] and substantial long term growth”, the company said in its results statement.

In a note on Tuesday, house broker finnCap retained their 1,100p target price on the group, saying the results were “better than expected” and “should be taken well”.

Shares in the firm fell 1.3% to 1,135p in early trading.

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