Diploma shares fall despite strong results and confident outlook

Diploma, a London-based supplier of specialized technical products and services, announced strong financial results for the year ended September 30, 2024, while expressing optimism about its prospects for fiscal 2025.

Diploma shares fall despite strong results and confident outlook

Pretax profit rose 13% to £176.6 million, up from £155.6 million the prior year, as revenue climbed 14% to £1.36 billion from £1.20 billion. Growth was primarily driven by the Controls segment, which posted a 10% revenue increase to £652.4 million, and Life Sciences, which grew 6%. The Seals segment recorded a modest 1% rise. Diploma increased its final dividend by 5% to 42.0 pence per share, bringing the total dividend to 59.3p, up from 56.5p last year. Free cash flow rose 21% to £197.9 million, supporting a 6.1% increase in diluted earnings per share to 96.1p. CEO Johnny Thomson stated, "Our strategy is delivering. We have driven strong organic growth through end-market expansion, geographical penetration, and product extension. Complementary acquisitions have accelerated this growth, providing great returns on capital. We have delivered another strong year."

Spending details

During FY 2024, the company made significant investments, spending £293 million on seven acquisitions, including the £243 million purchase of Peerless, while divesting three non-core businesses for £45 million. Looking ahead, Diploma anticipates organic revenue growth of approximately 6% in FY 2025, with acquisitions contributing an additional 2%, and an operating margin of about 21%. Continued investments in expanding operations in Australia and Canada are expected to sustain momentum. Despite the strong results, shares were down 6.8% at 4,228.00 pence in London on Tuesday.