Diploma shares rise after acquisitions boost sales and profits

Technical equipment supplier Diploma has increased its dividend payout for the year after reporting “strong” rises in sales and profits.

The FTSE 250 firm, which supplies filters, specialised wiring and fasteners, said it expects a strong contribution from acquisitions to help it make further progress in 2020.

Diploma posted a 15% increase in pre-tax profits for the year to September 30 to £83.5 million.

The firm said it believes its “resilient business model” will help it to continue growth in the new year despite an “uncertain” political and economic outlook.

It also reported a 12% year-on-year jump in revenues to £544.7 million, from £485.1 million in 2018, as it was boosted by acquisitions.

The company saw a 5% increase through its acquisition activity, which included a deal to buy Virginia Sealing Products for £56 million in July.

Meanwhile, organic growth also boosted revenues by 5% while favourable currency rates also provided around 2% of growth.

The firm’s life science division reported 7% sales growth, but weaker industrial markets weakened sales of seals to just 1% growth for the period.

The 15% increase in profits also drove a 15% jump in dividends, with the company recommending a final payout of 20.5p per share.

Diploma chief executive Johnny Thomson said: “Diploma has delivered another strong set of results, with double-digit revenue and earnings growth in the year.

“We were also delighted to welcome four new businesses into the group, all of which are strategically important and have exciting prospects.

“Our plans are about continuity, building on the strong foundations of our value-add distribution model, focusing on the development of the organisation’s capability to deliver that model at scale and focusing on the significant growth opportunities in our core markets and products.”

Shares increased by 2.1% to 1,736p in early trading.