Exova profit up 58% to £36m on £328m revenue

Exova CEO Ian El-Mokadem

Edinburgh-based industrial testing firm Exova Group said its 2016 revenue rose 10.8% to £328.6 million and profit before taxation rose 58% to £36.6 million despite weakness in its oil and gas business.

On a constant currency basis, revenue was up 2.4%.

Exova said it saw strong sector performancec in its fire, building products & certification, aerospace, health sciences and infrastructure & environment businesses.

But its oil & gas and industrials businesses “continued to weaken and forward visibility remains poor.”

Three acquisitions boosted Exova — Admaterials in Singapore and Jones Environmental Forensics and Insight NDT in the UK.

Full year dividend will be 3.4p per share, up from 3.2p.

Exova shares have risen about 65% in the past year to give it a stock market value of around £530 million.

Exova CEO Ian El-Mokadem said: “I am pleased to report another satisfactory set of results in line with expectations, demonstrating the strength of our diversified portfolio and our ability to respond to changing market conditions.

“Overall growth was strong with broad based organic growth across the portfolio, with the exception of our oil & gas and industrials sector.

“The portfolio has been strengthened by the recent acquisitions and disposals, and with extensive cost actions taken to mitigate the poor trading conditions in oil & gas, we continue to make good progress towards our medium-term objectives.”

In its outlook, Exova said it expects modest organic revenue growth at constant currency in 2017.

“This will be driven by Exova’s diversified exposure and good growth in most sectors, moderated by continuing pressure in oil & gas, and a lower point in the project cycle of our engines testing business,” said the firm.

“Organic growth is expected to be weighted towards the second-half, partly as a result of more favourable like-for-like comparisons. 

“Our acquisitions programme should continue to contribute to overall revenue growth.

“We expect that recent actions we have taken to reduce cost will offset general pressure on group margins in the current financial year.

“Our medium-term revenue expectation remains mid-single digit organic growth, and continued expansion through acquisitions.”

Headquartered in Edinburgh, Exova operates 135 laboratories and offices in 33 countries and employs around 4,200 people throughout Europe, the Americas, the Middle East, Asia Pacific and Africa.