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Gooch & Housego: revenue down, but demand recovery on the horizon


Gooch & Housego LON:GHH, the Somerset-based optical systems and components published its interim results for the six months to end-March earlier this week.

G&H isn’t a household name outside of Ilchester, but the AIM-listed company is a global leader in photonics technology and been in the business for nearly 80-years after Archie Gooch and Leslie Housego set up a firm to manufacture crystal optical components, used in microscopes and binoculars.

Today G&H design, develop, and manufacture a variety of photonic components, such as detectors, lasers, and fibre optic equipment.  These are used in a wide range of industries from aerospace and defence to life sciences and scientific research. It has operations in the US and the UK and listed in London in 1997.

The company has built a reputation for manufacturing products that can be used in extreme environments such as outer space and the bottom of the oceans.

The company reported revenues of GBP63.6m, marginally down year-on-year from 1H23 where G&H reported GBP64.5m revenues. The company also saw its profit before tax fall 44% y-o-y to GBP2.6m and debt increase from GBP12.9m to GBP22.2m. However, interim dividend per share increased by 0.1p y-o-y to 4.9p

The company’s shares opened on 4th June at 560p. Over one-year shares are up 0.4% and over the year-to-date down 5.7% with shares ranging between 450p and 685.66p.  It has a market capitalization of around GBP150m.

Recovering demand levels

Although the results were a bit uninspiring, the company believes that demand is coming back to its markets. The company’s industrial and medical laser markets dragged the overall group down, however management said that these markets are starting to show signs of life again and demand from fibre optic customers remains strong.

During the past year G&H sold its EM4 business, a design and manufacturer of optoelectronic components and subsystems including lasers, detectors and high frequency receiver or transmitter electronics.  G&H had acquired EM4 in 2011 for around USD19m as a way to increase its aerospace and defence capability. The optical manufacturer sold the Boston, Massachusetts-based company to what it describes as an unspecified buyer in the US that is a global technology company, for around USD12m. The sale was part of a strategic review, and on news that the US Department of Defence had cancelled some projects. The money was used to pay-down debt, and it did hit G&H’s bottom-line.

The company sounded an optimistic note, saying that the order book remained at a healthy level, valued at GBP115m and had orders secured that would support an expected increase in revenue and profitability. Management said that full year expectations are unchanged with reduced execution risks for the second half.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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