- The London-based group sells products such as industrial hoses and gaskets.
- Revenue is expected to rise 16% at constant currency levels this financial year.
Diploma actions were the biggest risers on the FTSE 100 on Monday afternoon after the technical products provider raised its annual guidance.
The company, which sells industrial gaskets, cables and hoses, now expects its turnover to increase by 16 percent at constant exchange rates for the year, compared to the 11 percent previously forecast.
Diploma also expects an operating margin of 20.5 percent thanks to recent acquisitions and “strong underlying performance.”
Forecast: Diploma, which sells industrial gaskets, cables and hoses, now expects its turnover to increase 16 percent at constant exchange rates for the year
Following this announcement, Diploma’s share price jumped 5 per cent to £40.98 in early Monday afternoon, making it the top performer in the FTSE 100.
Over the past five years, the company’s shares have soared 170 percent thanks to steadily rising sales and profits.
In the six months ending in March, the London-based company reported that turnover rose 10 per cent to £638.3 million, while adjusted operating profits expanded 14 per cent to £125.4 million.
Diploma was uniformly driven by acquisitions, especially within its stamp sector division, and volume-led organic growth.
It has bought six companies since last September, including Plastic and Rubber Group, DICSA and US-based Peerless Aerospace Fastener, which was acquired for around £236 million.
Operations have been further boosted by market share gains in its controls division and a strong result from its life sciences division in Canada and Australia.
Demand in the first market was supported by hospitals adopting technologies for use in the fields of urology, gynecology and endoscopy, while the second territory was boosted by sales of preconception genetic screening tests.
Johnny Thomson, chief executive of Diploma, said: “Our momentum is encouraging heading into the second half, supporting our upgrade to full-year guidance.”
He added: ‘Diploma has a long track record of double-digit EPS (earnings per share) growth with healthy returns. Our current performance and update reaffirm our confidence in delivering sustainable quality compounds.”
Russ Mold, investment director at AJ Bell, said: “The supply of appliances, cables and other technical items to keep factories and laboratories running may not speed up operations, but it has underpinned extremely strong long-term returns for the company. “.
“A lot of its recent growth has been due to acquisitions, which can raise alarm bells, but fundamentally it has been a key part of Diploma’s successful strategy over a long period.”