Diploma (DPLM) Trading update summary

Upgraded guidance and financial performance

• Organic growth guidance raised to 9% for FY26, with acquisitions contributing 3% and margins increased to approximately 25%, implying a 13% uplift to consensus operating profit.

• Earnings expected to rise over 20% for the year, supported by strong returns on capital and sustainable compounding.

• First half performance is exceptionally strong, with high single-digit growth excluding Peerless and double-digit growth in IS Group and Clarendon.

• Eight acquisitions completed in the last two quarters for around GBP 130 million, adding about GBP 20 million in annualised operating profit, with a healthy short-term pipeline.

• Strong trading momentum continues, with confidence in H2 performance.

Business and segment highlights

• Controls segment sees robust growth, especially in aerospace, energy, defence, and datacentres, with IS Group and Clarendon delivering double-digit growth and margin improvements.

• Peerless continues to outperform, with sustainable market dynamics and ongoing market share gains.

• North American Seals shows strong core growth, supported by infrastructure and nuclear sectors, while international performance, especially UK, remains challenging.

• Life Sciences achieves mid-single-digit growth and share gains in MedTech and IVD in the UK and Ireland, with expanding margins.

• Windy City benefits from data center and distributed antenna system demand, maintaining strong momentum.

Market and operational outlook

• Market demand remains strong and consistent, with favorable dynamics and a significant backlog in new builds and refurbishments.

• Supply chain constraints persist, with no expected near-term changes.

• Defense exposure is growing, supported by new investments, a Czech Republic facility, and bolt-on acquisitions like Spring Solutions.

• Pricing inflation from energy costs is minimal and patchy, with the group well-positioned to manage any increases.

• Organic growth is primarily volume-driven, with pricing playing a lesser role.