‘Quality compounder’ Diploma (DPLM), which distributes industrial goods, is a steady long-term performer and its FY25 results have duly delivered.
Revenue for the year to September is up 12% to £1.52 billion, better than forecast, with 11% organic growth. Adjusted operating profit is up 20% to around £343 million for a margin of 22.5% vs 20.9% previously.
Bear in mind, everyone says the global market is ‘challenging’ and macroeconomic uncertainty is stopping firms buying. That doesn’t seem to be the case for Diploma’s customers, however.
For FY26, CEO Johnny Thomson is projecting 6% organic sales growth and a similar operating margin to this year. That isn’t pushing the boat out, although performance will be 1H weighted after a very strong H2 2025.
We’ve liked Diploma for a long time, and we’ve been well rewarded with a 25% gain year-to-date and a 133% gain over five years.
Adjusted FY25 EPS were forecast at 171p so after today’s beat (176p) we should see upgrades to FY26 and FY27 forecasts.
However, the shares aren’t cheap compared with their historic average valuation so the group needs to keep beating estimates.
Read the press release here: https://www.diplomaplc.com/investors/
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