Oxford Instruments (OXIG) H2 2024 earnings summary

Executive summary

• Revenue increased by 9.8% at constant currency to £470.4m, with adjusted operating profit up 3.7%, supported by strong order book visibility and robust performance in semiconductors, materials analysis, and healthcare & life science.

• Strategic pivot away from sensitive product areas in China, driving growth in Europe and Southeast Asia, and supported by a robust order book of £302m for FY25.

• New simplified divisional structure introduced: Imaging & Analysis (70% of revenue, 22%-24% margins) and Advanced Technologies (30% of revenue, targeted for improvement), with a major operational transformation program.

• Refreshed strategy focuses on three core markets: materials analysis, semiconductors, and healthcare & life science, with targeted R&D investment and enhanced customer service.

• Maintained strong net cash position of £84m and increased total dividend by 6.7%.

Financial highlights

• Revenue rose to £470.4m (+5.8% reported, +9.8% constant currency); adjusted operating profit was £80.3m (flat reported, +3.7% constant currency), with margin down 100bps to 17.1%.

• Adjusted profit before tax increased 1.6% to £83.3m; adjusted basic EPS fell 3.3% to 109.0p.

• Dividend per share increased by 6.7% to 20.8p; net cash at year-end was £84m.

• Cash conversion was 47% (64% normalised), below historic rates due to inventory build and site moves.

• Operating margin decreased to 17.1% from 18.1%, mainly due to quantum business exit from China and ongoing investment.

Outlook and guidance

• Expecting good constant currency progress for FY25, supported by a strong order book and improvement actions.

• Medium-term targets: 5-8% organic revenue CAGR, operating margin above 20%, and cash conversion above 85%.

• Short-term headwinds include currency effects and investment costs, with margin improvement anticipated over 3-5 years.

• Forecasts further currency headwind in 2024/25, with estimated revenue impact of £8.4m and AOP impact of £6.2m.