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(Sharecast News) - AB Dynamics reported lower interim revenue and profit on Tuesday, after previously-flagged order timing delays, but maintained its full-year outlook, citing recovering order intake and strong structural growth drivers.
Revenue fell 16% to 48.8m in the six months ended 28 February, down from 58m a year earlier, reflecting delays in order intake and customer delivery schedules, as well as weaker volumes at its VadoTech testing services business in China.
Adjusted operating profit declined 16% to 9.1m, while adjusted EBITDA fell 12% to 11.3m.
The group reported a statutory operating loss of 12.1m, compared with a 6.7m profit a year earlier, largely due to 16.8m of exceptional charges related to VadoTech, including a non-cash impairment.
Despite the revenue decline, gross margin improved by 350 basis points to 63.7%, and the adjusted operating margin was maintained at 18.6%, supported by cost mitigation measures, operational improvements and a favourable revenue mix.
Adjusted diluted earnings per share fell 15% to 31.3p, while the interim dividend increased 10% to 3.08p per share, reflecting the board's confidence in the group's financial position.
Net cash stood at 39.3m at the period end, with cash conversion of 102%.
Order intake was 64m, slightly below 66m a year earlier but showing recovery following a subdued third quarter of the prior financial year impacted by tariffs.
The period-end order book increased to 47m, providing around 70% visibility of expected full-year revenue.
"As expected, revenue in H1 reflected the dip in order intake in the third quarter of last year following disruption from tariffs, and it is pleasing to see order intake recovering to more normal levels," said chief executive Sarah Matthews-DeMers.
She added that the group remains focused on long-term growth opportunities.
"The long-term growth opportunity for AB Dynamics remains compelling and our strategy is unchanged; going forward we expect evolution not revolution with an enhanced focus on innovation, excellence and continuous improvement."
AB Dynamics said it would undertake a strategic review of its VadoTech business in China after lower-than-expected customer activity, noting that the service has become commoditised and impacted by local market conditions.
Looking ahead, the board said it expected adjusted operating profit for the full year to be in line with market expectations, with a second-half weighting of 55% to 60% of revenue.
The company said it remained resilient to short-term automotive headwinds due to its diversified geographic footprint and customer base, and highlighted ongoing demand driven by regulatory and technological trends in active safety, autonomous systems and vehicle automation.
"Order coverage and our confidence in operational execution leaves us well positioned to deliver in the second half of the year," Matthews-DeMers said, adding that the group continued to monitor geopolitical risks but remains confident in its ability to manage changing conditions.
At 1526 BST, shares in AB Dynamics were down 1.05% at 1,128p.
Reporting by Josh White for Sharecast.com.
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