Acal's (LON:ACL) H117 results reflected the weaker demand that was previously flagged combined with positive FX trends. Design & Manufacturing (D&M) continues to grow as a proportion of total revenues and profits and management has raised its targets for this part of the business. The company continues to consider further acquisitions, recently increasing its debt facility to support its growth strategy. The outlook for FY17 is unchanged – based on H117 order inflow, H217 is expected to be stronger and we leave our earnings forecasts substantially unchanged.
H117 results reflect weaker economy & currency
Acal reported H117 revenue growth of 10%, although stripping out the effects of currency and acquisitions, organic revenues declined 7% y-o-y. Underlying operating profit and EPS grew 14% and 10% respectively. The company had already flagged the challenging trading conditions in H1, and reacting to this, launched an efficiency programme which aims to generate cost savings of £4m pa. Despite short-term economic weakness, management has raised its mid-term targets (originally set two years ago), looking for a higher contribution from D&M, stronger operating margins, and growth in international revenues.
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