In This Article:
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Oxford Instruments PLC (OXINF) reported a strong first half performance with a 10.4% revenue growth at constant currency, driven by growth in new materials and semiconductor markets.
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The company maintained excellent margins in its imaging and analysis division, contributing the majority of the group's profit with a margin of over 24%.
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The strategic pivot from China to other markets has been successful, with strong growth in the US and other parts of Asia offsetting the anticipated reduction in China revenue.
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Oxford Instruments PLC (OXINF) has made significant progress in its operational transformation program, particularly in its Belfast facility, leading to improved productivity and inventory management.
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The company has a strong order book, providing good visibility into the second half, with an underlying book to bill ratio of 1.01.
Negative Points
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The healthcare and life sciences market showed weakness, impacting overall results despite the strong performance in other sectors.
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Currency headwinds negatively impacted reported revenue and profit, with a 5.8 million reduction in revenue and a 3.9 million reduction in profit.
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The advanced technologies division, while showing revenue growth, reported a loss due to higher facility running costs and inventory provisioning.
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The effective tax rate increased to 25.1% due to a change in the geographical mix of profits, affecting overall profitability.
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Cash conversion was below expectations at 17%, partly due to timing mismatches in capital contracts and higher working capital requirements.
Q & A Highlights
Q: Can you provide more specifics on the stabilization of the healthcare market and the impact of the Dragonfly system introduction? A: The healthcare market has stabilized with order intake now in line with the previous year, despite a strong comparator due to the Dragonfly system's success. Orders from OEMs have improved through Q2, and Dragonfly continues to perform well, indicating potential benefits in H2. (Respondent: Unidentified_1)
Q: What is the expected impact of the national insurance hike on margins next year? A: The national insurance hike will have an impact of about 1.62 million for the group, which is not overly significant. We aim to pass on costs through pricing adjustments where possible. (Respondent: Unidentified_2)
Q: Is there a risk of pre-emptive ordering in North America due to potential tariff changes with a new President? A: There is no evidence of pre-emptive ordering due to potential tariff changes. Our strategy remains aligned to handle any such changes, similar to how we managed during the previous tariff adjustments. (Respondent: Unidentified_1)