Acal's (LON:ACL)H118 trading update confirms that strong demand continued into Q218. Both divisions saw a positive trading environment in H1 resulting in group organic revenue growth of 9% y-o-y and group reported revenue growth of 21%. We have raised our revenue forecasts for FY18 and FY19 to reflect stronger trading, which results in upgrades to our normalised EPS forecasts of 3.8% in FY18 and 3.7% in FY19. In our view, the sustained improvement in demand is not reflected in the share price.
Strong trading continues through H118
Acal grew revenues 21% y-o-y in H118, with growth of 15% at constant exchange rates (CER) and organic CER growth of 9% (in line with Q118). Both divisions performed well: Design & Manufacturing saw 11% organic CER growth to make up 57% of H118 revenues (FY17: 52%) and Custom Distribution saw 7% organic CER growth. Demand was driven by new project wins and cross-selling as well as favourable market conditions in continental Europe, the US and Asia. Order intake grew 15% y-o-y (+10% organic CER) providing good backlog support going into H218. Gross margin stabilised in H118 remaining at the same level as Q417.
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