Shares in heating and ventilation group Volution (FAN) eased 3.7% to 601p despite the firm raising FY26 profit guidance. Following a strong H1 and with continued momentum in H2, EPS is seen hitting the top end of market forecasts.
Encouraging outlook
For the six months to 31 January, the FTSE 250 firm posted a 22% increase in revenue to £229 million. All three regions – the UK, Europe and Australasia – delivered organic revenue growth in line with the firm’s 3% to 5% target.
The rest of the uplift came from recent acquisitions, including Fantech in Australia, plus a small currency tailwind. Operating profit rose at a similar pace to revenue, up 21% to £51.6 million, maintaining a 22.6% margin.
Cash conversion was strong at 98%, while leverage was 1.3 times EBITDA. The firm also made another Australian acquisition in February giving it exposure to mining end-markets.
‘The short to medium-term outlook remains very encouraging, supported by favourable regulatory tailwinds and market dynamics’, commented CEO Ronnie George.
Despite increased geopolitical instability, George was upbeat about the full year. With H1 in the bag and a strong H2 in prospect, the CEO said EPS would be ‘at the top end’ of forecasts.
Volution’s ability to continue delivering despite whatever is thrown at it is impressive. Despite a slower than expected recovery in UK housing, for example, the firm still grew domestic revenue organically.
The Nordics, which have been tough in recent years – as retailer Currys (CURY) would attest – are showing signs of recovery. Meanwhile the Netherlands is seeing increased demand for retrofitting heat recovery systems to existing housing.
The real jewel though is the Australasian business where Volution has been able to add top-quality assets and people. It’s latest acquisition there will immediately boost earnings and is a further example of smart capital allocation.
It’s unfortunate today’s announcement comes in the midst of a ‘risk-off’ phase in markets. However, the recent retracement has left the shares lower on the year which opportunistic buyers will surely appreciate.
Read the press release here: https://www.volutiongroupplc.com/investors/results-reports-and-presentations
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