11 June 2024
Announcement of preliminary results for the 12 months to 31 March 2024
Robust performance and market-leading technology in structural growth markets provide excellent platform for revenue growth and margin expansion
Financial highlights
- Revenue growth of 9.8% at constant currency
- Underlying book-to-bill positive at 1.035, despite our strategic decision to move away from sensitive product areas in China
- Order book at £302m (2023: £320m), providing good visibility for year ahead
- Adjusted operating profit of £80.3m broadly in line with last year (2023: £80.5m); growth of 3.7% at constant currency
- Adjusted operating profit margin 17.1% (2023: 18.1%) down 100bps, primarily reflecting losses incurred in our quantum business as a result of ceasing commercial activities in China and continued operational investment
- Normalised cash conversion of 64%, excluding expenditure on facility expansion, reflects increase in working capital to support major site move and growth
- 6.7% increase in the total dividend to 20.8p (2023: 19.5p)
Operational highlights
- 7% semiconductor revenue growth reflects greater exposure to compound semiconductor market and improved H2 demand for analysis tools
- Double-digit growth in materials analysis and healthcare & life science markets underpinned by strong research funding
- New state-of-the-art compound semiconductor facility in Severn Beach now operational
- Further investment for growth includes expansion of Belfast microscopy and scientific camera facility
- Withdrawal of quantum commercial activities in China, in response to geopolitical dynamics, resulted in in-year losses
- Action taken to focus resources on non-sensitive areas in China and grow revenue in other regions
- Agreement to purchase FemtoTools AG, a leading developer of nanoindentation instruments
- Carbon reduction goals accelerated to achieve net zero in Scopes 1 and 2 by 2030
Strategy update
- A new lens on Oxford Instruments with a plan for significant value creation, focusing on two distinct business divisions – Imaging and Analysis and Advanced Technologies:
- ‘Build on and improve’ our excellent Imaging and Analysis business (recent adjusted operating profit margin history 22–24%)
- ‘Fix, improve and grow’ in Advanced Technologies (recent adjusted operating profit margin history 0–4%)
- Driving improved organisational execution:
- Deeper focus on fewer markets and product technologies to enhance growth
- Customer service and operational performance step change
- Simplified organisation and improved cost efficiency
- Capital allocation priorities designed to create long-term value creation, maximising shareholder returns
- Medium-term targets:
- Organic growth of 5–8% CAGR
- Adjusted operating margin improvement to 20%+
- Cash conversion of over 85%
- Continuing to invest in growth including 8–9% of revenue in R&D
- Strong ROCE (currently 29%)
- Selective acquisitions bringing complementary capabilities
Summary and outlook
Richard Tyson, CEO of Oxford Instruments plc, said:
“I am pleased with the results for the full year and the development of the business during the year. We have reported strong revenue growth of 9.8% at constant currency, with adjusted operating profit in line with expectations. I am grateful to my colleagues across Oxford Instruments for their commitment and energy through a busy year.
We have rebalanced our positions in regional markets in the face of geopolitical shifts, focusing our resources on non-sensitive areas in China, and successfully growing revenue and orders in Europe and elsewhere in Asia. We have continued to make organic investments to support our future growth, with our state-of-the-art compound semiconductor facility now operational. Underlying order intake has remained robust, with a positive book to bill even though we had stronger growth in the second half, and the orderbook gives us good visibility into the year ahead.
I am hugely impressed with the strong platform at Oxford Instruments, anchored by our market-leading technologies and our talented and committed workforce. My work with leadership teams around the business has confirmed our view that there is significant opportunity to build on our core strengths. I have today outlined a new strategy, setting targets to improve the returns from the business in the medium term. As part of this strategy, we are reorganising the Group into two distinct business divisions to simplify and enhance our operations. We will target growth by focusing on fewer markets and a sharpened product portfolio, tackling key areas where improvement is required and delivering a step change in operational and service performance.
We are in a strong position to improve and grow the business, putting it on a sustainable growth footing through our market-leading offering together with operational and efficiency improvements. Given our strong order book and pipeline, coupled with positive business improvement actions, we expect to make good constant currency progress in the full year ending March 2025.”