News Details

Strong through-cycle performance delivering record earnings & cash flow;

upgrading medium-term operating margin target to 17%

discoverIE Group plc (LSE: DSCV, “discoverIE” or “the Group”), a leading international designer and manufacturer of customised electronics to industry, today announces its preliminary results for the year ended 31 March 2025 (“FY 2024/25” or “the year”).

Highlights

• Adjusted operating profit up 8% CER
  • Adjusted operating margin of 14.3% (H2: 14.8%), up 1.2ppts, well ahead of FY 2024/25 13.5% target
  • Record adjusted EPS up 5%, exceeding the top end of market expectations

• Revenue down 2% CER as industry-wide inventory correction works through
  • Full year sales -7% organic⁽³⁾, improving through the year (H1: -10%, H2: -4%)

• Orders return to growth up 2% organic, led by S&C up 12% (later-cycle M&C: -4%)
  • Q4 pick-up with both divisions increasing by 15% organically

• Excellent free cash flow⁽⁴⁾ of £40.4m, up 9% with a conversion rate of 106%, well above 85% target
  • Additionally, proceeds from Santon Solar Business & Acal BFi disposals received in full (£13m)
  • Buy-in of legacy defined benefit scheme (c.£1.5m cash savings per year)
  • Year-end gearing⁽⁵⁾ of 1.3x, below the lower end of target range (1.5x to 2.0x)

• Further progress towards other key targets
  • ROCE⁽⁶⁾ of 15.8% (up 0.1ppt) with ROTCE of 52%
  • Carbon emissions reduced by 59% since CY 2021⁽⁷⁾, well on track for 65% target in CY 2025

• Two earnings-accretive, bolt-on acquisitions for initial consideration of £29m
  • £80m funding capacity for further acquisitions

• Adjusted operating margin target upgraded to 17% by FY 2029/30 (from 15% by FY 2027/28)

• Outlook: Growth drivers remain strong with the Group well positioned
  • Over £350m⁽⁸⁾ of new design wins in the year support growth into the medium-term
  • High growth security market added as a fifth target market
  • Strong pipeline of acquisition opportunities
  • Group will benefit from further reductions in interest rates
  • Limited direct impact from US tariffs

Nick Jefferies, Group Chief Executive, commented:

“discoverIE delivered another strong performance with record operating profits and earnings, despite prolonged industry-wide destocking which resulted in 3% lower sales for the year. Adjusted operating margins increased to 14.3%, comfortably exceeding our target for the year, with excellent cash generation once again. Fourth quarter orders increased significantly in both divisions, as inventories normalised.

Our flexible production model together with Group-wide operating efficiencies more than offset lower sales, protecting profitability through this stage of the cycle. This is a great strength of the Group, enabling growth in operating profits and margins in each of the last 10 years (in-line in the Covid year) and reducing earnings cyclicality. We see the potential to deliver further manufacturing efficiencies and commercial synergies across the Group and have upgraded our five-year operating margin target to 17%.

Whilst we will pass on any incremental tariff costs, we continue to do all we can to mitigate them with our local manufacturing and expect limited direct impact, although remain mindful of the volatile economic conditions and its potential to impact customers’ demand.

discoverIE is aligned with target markets which are underpinned by structural growth drivers and, with the addition of the security market during the year, our total market opportunity increased to over $30bn. With a strong pipeline of organic and inorganic opportunities, the Group is well placed to continue its resilient performance and development.”

Analyst and investor presentation:

A results briefing for sell side analysts and investors will be held today at 9.30am (UK time) at the offices of Peel Hunt. If you would like to join in person or via the live webinar, please contact Burson Buchanan at discoverie@buchanan.uk.com.

Enquiries:

discoverIE Group plc 01483 544 500

Nick Jefferies Group Chief Executive

Simon Gibbins Group Finance Director

Lili Huang Head of Investor Relations

Henry Carver Director of Investor Relations

Burson Buchanan 020 7466 5000

Chris Lane, Toto Berger, Jack Devoy

discoverIE@buchanan.uk.com

Notes:

(1) Following a review of alternative performance measures (“APMs”) of other companies, the Group has renamed its ‘Underlying’ measures as ‘Adjusted’ in order to make the term consistent with other companies. The definitions of these APMs have not changed and are consistent with prior years. ‘Adjusted operating profit’, ‘Adjusted operating margin’, ‘Adjusted EBITDA’, ‘Adjusted profit before tax’, ’Adjusted EPS’, ‘Adjusted operating cash flow’ and ‘Free cash flow’ are non-IFRS financial measures used by the Directors to assess the performance of the Group. These measures exclude acquisition and disposal related costs (amortisation of acquired intangible assets of £16.2m and net acquisition and disposal expenses of £1.9m) totalling £18.1m. Equivalent Adjusting Items within the FY 2023/24 adjusted results totalled £26.0m. ‘Adjusted EBITDA’ also excludes IFRS 16, non-cash share-based payments cost and IAS19 pension costs in line with the Group’s banking covenant. For further information, see note 6 of the attached condensed consolidated financial statements.

(2) Growth rates at constant exchange rates (“CER”). In calculating CER for the year, the average Sterling rate of exchange strengthened 3% against the Euro compared with the average rates for last year, 1% against the US Dollar and 3% on average against the three Nordic currencies.

(3) Organic growth for the Group compared with last year is calculated at CER and is shown excluding the first 12 months of acquisitions post completion (Silvertel in August 2023, 2J Antennas Group (“2J”) in September 2023, Shape, DTI and IKN in Q4 2023/24, Hivolt in August 2024 and Burster in January 2025) and excluding last year’s announced disposal of the Santon solar business unit. For further information, see note 6 of the attached condensed consolidated financial statements.

(4) Free cash flow is cash flow available for the payment of dividends and investment in acquisitions. Free cash flow conversion is free cash flow divided by adjusted profit after tax. See definitions in note 6 of the attached condensed consolidated financial statements.

(5) Gearing ratio is defined as net debt divided by adjusted EBITDA (excluding IFRS 16; annualised for acquisitions).

(6) ROCE is defined as FY 2024/25 adjusted operating profit including the annualisation of acquisitions, as a percentage of net assets excluding net debt, deferred consideration related to disposed businesses and legacy defined benefit pension asset/(liability).

(7) CY 2025 target is to reduce scope 1 & 2 carbon emissions by 65% on an absolute basis (base year CY 2021).

(8) This represents estimated lifetime value (ELV)

(9) Unless stated, growth rates refer to the comparable prior year. Sequential growth compares to the immediately preceding period e.g. H2 2024/25 would be compared to H1 2024/25 on an organic basis.

(10) The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulation, Article 7 of EU Regulation 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.

Notes to Editors:

About discoverIE Group plc

discoverIE Group plc is an international group of businesses that design and manufacture innovative electronic components for industrial applications.

The Group provides application-specific components to original equipment manufacturers (“OEMs”) internationally through its two divisions, Magnetics & Controls, and Sensing & Connectivity. By designing components that meet customers’ unique requirements, which are then manufactured and supplied throughout the life of their production, a high level of repeating revenue is generated with long-term, high quality customer relationships.

With a focus on key markets driven by structural growth, increasing electronic content and sustainability, namely medical, electrification of transportation, renewable energy, security and industrial automation & connectivity, the Group aims to achieve organic growth that is well ahead of GDP and to supplement that with complementary acquisitions. The Group is committed to reducing the impact of its operations on the environment in order to reach net zero. With its key markets aligned with a sustainable future, the Group has been awarded an ESG “A” rating by MSCI and is Regional (Europe) Top Rated and Industry (Technology Hardware) Top Rated by Sustainalytics. 

The Group employs c.4,500 people across 20 countries with its principal operating units located in Continental Europe, the UK, China, Sri Lanka, India and North America.

discoverIE is listed on the Main Market of the London Stock Exchange and is a member of the FTSE 250, classified within the Electrical Components and Equipment subsector.