discoverIE Group (DSCV) H1 2026 earnings summary

Executive summary

• Record profitability and cash flow achieved in H1 FY26, with adjusted operating profit up 5% CER to £30.2m and adjusted EPS up 6% to 19.5p, driven by organic growth and strong through-cycle performance.

• Three out of four operating units returned to mid-single digit organic growth, led by Sensing & Connectivity and Magnetics, while Controls remains weak but is expected to stabilize in H2.

• Free cash flow and operating cash flow conversion both exceeded 100%, with free cash conversion at 104% and net debt reduced to £90.7m, maintaining a decade-long trend.

• Strategy remains focused on custom electronics for OEMs in industrial, medical, transportation, security, and renewable energy markets, with low customer concentration and long product lifecycles.

• On track to deliver full-year adjusted earnings in line with Board expectations, supported by a robust acquisition pipeline and disciplined capital allocation.

Financial highlights

• Revenue rose to £216.4m, up 3.5% CER and 2.5% reported, with Q2 sales up 1%.

• Adjusted operating margin improved to 14.0% (up 0.3ppt CER), and adjusted profit before tax up 7% to £25.5m.

• Adjusted EPS up 6% to 19.5p; reported profit before tax up 11% to £17.6m and diluted EPS up 11% to 13.5p.

• ROCE at 15.4%, above target, and ROTCE at 46.5%.

• Interim dividend per share increased 4% to 4.05p, maintaining a progressive policy.

Outlook and guidance

• Improving order and sales trends, with a strong pipeline of design wins and M&A opportunities; order book at £157m provides strong visibility for H2.

• Controls unit expected to stabilize in H2, supporting margin recovery.

• Tariff situation stabilizing, though some uncertainty remains due to pending US Supreme Court decision.

• Growth drivers remain strong, with benefits expected from recovering cyclical demand and lower interest rates.