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Diploma PLC Flies As Revenues Rise

diplomaThe share price of Diploma (LSE: DPLM) — an international group that supplies specialised technical products and services in the life sciences, seals and controls sectors — rose up over 3% this morning, following publication of its second interim management statement, for the period 1 April 2014 to today.

Then company says that trading has been consistent with expectations, with revenues for the nine months to 30 June 2014 up 6% on the comparable period last year. Adjusting for  currency effects and acquisitions, revenues rose 8% on an underlying basis, but the £9m contributed by acquisitions was more than off-set by the impact of adverse exchange rates on revenue generated outside the UK.

Diploma reported that each of it sector businesses has continued to make “good progress”, benefitting from an improving economic environment. Revenues in Life Sciences were up 8% on the comparable period last year, Seals saw a 6% rise in revenue, boosted by better performance in the US after-market and continued growth in the industrial OEM operations, and revenues in Controls grew 9%, despite a slower rate of growth in some markets segments.

The company said that its £2.9m acquisition of Specialty Fasteners — a UK distribution business — was completed in June, and that it bought Australian healthcare distributor Chemzyme for £0.7m earlier this month. So far in 2014, Diploma reports that it has spent around £15m on acquisitions, as an integral part of the group’s growth strategy, and that it has “an improving pipeline of opportunities” for future purchases.

Despite this morning’s rise, at 642.5p, Diploma’s share price is down 5.7% so far in 2014, versus a FTSE All-Share that’s up a scant 0.35%. But over five years Diploma is trouncing the index, with a share price that’s increased 344%, compared with a gain of 55% by the FTSE All-Share.

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Jon Wallis has no position in any shares mentioned.