AB Dynamics confident after strong full-year growth
By Josh White
Date: Tuesday 26 Nov 2024
(Sharecast News) - Transport testing, simulation, and measurement specialist AB Dynamics reported a 10% increase in revenue to £111.3m for the year ended 31 August on Tuesday.
The AIM-traded firm said adjusted operating profit rose 22% to £20.3m, with the adjusted operating margin improving by 170 basis points to 18.2%.
Recurring revenue accounted for 45% of total revenue, up from 40% in the prior year, reflecting its focus on sustainable income streams.
Adjusted EBITDA grew 18% to £24.2m, while adjusted diluted earnings per share rose 15% to 70p.
The total dividend per share was raised 20% to 7.63p.
Net cash at year-end stood at £28.6m, slightly down from £32m a year earlier and reflecting £17m invested in acquisitions.
Operating cash flow increased to £27.9m , with a cash conversion rate of 115%.
Strategically, AB Dynamics said it continued its rapid pace of product innovation in the year, with new testing and simulation solutions such as the Soft Pedestrian 360 and LaunchPad Spin approved by Euro NCAP.
Its ABD Solutions division secured a £2m contract for an automated mileage accumulation system, marking progress in diversifying beyond the automotive market.
The group also completed two acquisitions - Venshure Test Services in the US and Bolab Systems in Germany, strengthening its capabilities in electric vehicle and power electronics testing.
Looking ahead, AB Dynamics said it was targeting organic revenue growth of 10% annually and aimed to expand its operating margin to 20%.
Early trading in the 2025 financial year was described as robust, supported by a solid order book and strong demand drivers in areas such as active safety, autonomous systems, and vehicle automation.
While cautious about potential delays in pipeline conversion due to disruptions in the automotive sector, the board said it expected adjusted operating profit for the year to exceed current market expectations.
"The group has delivered a very strong performance, with sustained high levels of demand across key markets, demonstrating the benefits of the investment made in recent years in the commercial and operating capability of the business," said chief executive officer Dr James Routh.
"We see significant opportunity in our core markets in automotive, which are supported by long-term structural and regulatory growth drivers, and are continuing to invest in new product development and technology.
"In addition, we are investing in innovative technologies to diversify the business through our technology accelerator, ABD Solutions."
Dr Routh said trading in the early part of the 2025 financial year had been strong, supported by a "solid" order book, providing visibility.
"Whilst being mindful of a potential slowdown in timing of pipeline conversion due to disruption in the automotive market and customer delivery schedules, the board remains confident that the group will make further financial and strategic progress this year.
"With strong trading momentum entering the 2025 financial year and benefiting from the acquisition of Bolab and improving margins, the Board expects to deliver 2025 adjusted operating profit slightly ahead of current expectations."
At 1025 GMT, shares in AB Dynamics were up 0.49% at 2,040p.
Reporting by Josh White for Sharecast.com.
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