Oxford Instruments Defies Profit Drop with Share Price Surge
Shares in Oxford Instruments experienced a remarkable rally on Tuesday, climbing nearly 10 percent despite the company reporting significant declines in both revenue and profits during the first half of the year. The manufacturing and research specialist saw its stock price jump to 1,970 pence in early trading, demonstrating strong investor confidence in the company's recovery prospects.
Financial Performance Under Pressure
The FTSE 250 constituent revealed that revenue had decreased by 7.9 percent to £185.5 million, reflecting what the company described as "significant disruption" during the early months of the trading period. This downturn was primarily driven by delayed shipments and market volatility resulting from US tariffs.
Profit before tax also suffered, falling 22.5 percent from £26 million to £25.4 million. However, the company delivered a positive surprise with cash flow, which increased substantially from £39.3 million to £45.1 million. Basic earnings per share declined by 29.9 percent, dropping from 46.6 pence to 33 pence.
Despite these challenges, Oxford Instruments maintained its full-year operating profit guidance of £5.5 million and raised its dividend by 5.9 percent to 5.4 pence per share.
Strategic Moves and Growth Drivers
The company's optimism stems from several key developments. Order intake showed modest growth, increasing by 1.4 percent to £205.2 million, driven particularly by strong semiconductor sales to US and European markets through its advanced technologies division.
Chief executive Richard Tyson commented: "Our trading performance reflects that we, like others, have had to navigate the impact of tariffs and the related global economic disruption."
Oxford Instruments has completed several strategic initiatives, including:
- The move to a new semiconductor facility in Bristol
- The sale of its Somerset factory for £4.8 million in September
- The launch of new products from its Imaging and Analysis division
- Plans to sell its Nano Science branch in the third quarter
Future Outlook and Market Confidence
The company has made significant progress on its share buyback programme, completing £32 million of its initial £50 million commitment. The Board now expects to increase this programme to £100 million, signalling strong confidence in the company's financial position.
Analysts have maintained their buy rating on Oxford Instruments, with Peel Hunt describing the recent setbacks as "an opportunity to build earnings momentum." The firm continues to invest heavily in research and development, committing 8-9 percent of revenue to enhance its capabilities in key growth areas.
Capital from the upcoming Nano Science sale is expected to be reinvested into the company's top-performing markets, particularly semiconductors and life sciences, positioning Oxford Instruments for sustained growth in the second half of the year and beyond.
