26 Feb Gooch & Housego announces positive trading update
26 Feb 2021
Virtual AGM reports improved levels of industrial laser demand and further streamlining of manufacturing.
Gooch & Housego, the specialist manufacturer of photonic components and systems, this week held its Annual General Meeting in Ilminster, UK. As previously disclosed, owing to Covid-19 guidelines, the event was run as a closed “virtual” meeting.
The private limited company reported its current trading position and gave an outlook, stating, “During the first four months of the [current] financial year we have seen improved levels of demand across the industrial laser sector. In line with previously reported trends there have been continuing high levels of demand for fiber optics, high- reliability fiber couplers and our Aerospace and Defense (A&D) capabilities. Life sciences has continued to grow strongly.
“Asian markets have led the recovery in industrial lasers, though US and European markets are also now demonstrating encouraging trends,” the statement continued. “The roll out of new technologies, such as 5G, has fueled demand-led growth, building on the previously reported recovery in semiconductors.”
“Our A&D order book remains robust with new UK optical system orders, which have built on our existing US A&D contracts.”
The company added that the medical diagnostics market has continued to demonstrate good growth and that there are improved levels of demand for G&H medical laser products, which had been affected by the reduction in non-Covid-19 procedures in 2020.
Mark Webster, Chief Executive Officer of Gooch & Housego, commented, “Trading in the first four months of the financial year has seen improved levels of demand in industrial and medical lasers.
“We are proud of the way that our staff have responded to the challenge of the pandemic. All of our sites remain fully open and are operating in line with all relevant health and safety rules and regulations.
“Good progress has been made on the first phase of streamlining our manufacturing base. In addition, two further sites have started to move their manufacturing to other established sites. We expect both phases to be substantially complete by the end of current financial year.
“The challenge of the pandemic has validated our long term strategic goals of diversification and moving up the value chain. We intend to vigorously pursue these goals through internal investment and where appropriate, acquisitions.”
The company’s statement added that its longstanding strategic objectives are to “diversify its business and move up the value chain. A&D represents around a third of our revenue and life sciences continues to grow strongly, now representing over 25% of Group revenues. We are securing important new orders thanks to our growing systems capability across all three of our business sectors.”
G&H stated that “cash generation has remained robust and the net debt of the Group has further reduced during the first four months of the financial year, despite the payment of the final earn out associated with the acquisition of the ITL business (in 2018). As at 31 January 2021 our order book was at £95.0 million ($132.2 million) (previous year equivalent was £94.1 million / $131.0 million), an increase of 1.0%, or 3.3% at constant currency.”
Glenrothes site closed
As part of the company’s ongoing performance improvement program, G&H stated that it is making good progress in streamlining its manufacturing sites: “All of the product lines at our Glenrothes, Scotland facility have been transferred to our new UK Precision Optics hub in Ilminster and the Glenrothes site has been closed.”
Furthermore, outsourcing of its Acousto Optic (AO) products from Ilminster to its contract manufacturer in Asia “is progressing well and we expect this to be substantially complete by the end of the current financial year.”
The company has launched a further two streamlining projects. Production at its Baltimore, MD, facility will be transferred to its Boston, MA, and Torquay, Devon, UK, facilities and the site in Baltimore will be closed. “Many of our Baltimore customers are also served by our Boston and Torquay facilities. This will result in two fibre optic hubs, one on each side of the Atlantic,” the company said.
Production at the G&H facility in St Asaph, Wales, is also transfering to the UK Precision Optics hub in Ilminster. An optical systems engineering and design center will be retained in St Asaph, housing optical systems engineers in order to continue their work developing new products.