Gooch & Housego (GHH): In-Line Interims, Thesis Intact

G&H’s H1 results land broadly as expected — no bad thing, given the top line was already flagged at April’s trading update. Revenue rose 15.5% to £81.9m and the order book hit a record £167.3m, with Aerospace & Defence doing the heavy lifting: revenue up 51.7% and segment profit leaping to £3.6m from just £0.6m. That A&D inflection is precisely the structural story I set out in my recent initiation piece on GHH, and today’s print reinforces it.

Two things temper the enthusiasm. Group operating margin barely budged (8.8%) because Life Sciences stumbled, with segment margins collapsing to 4.6% on Pockels Cells supply problems. And cash conversion was weak, nudging leverage up to 1.5x. Neither derails the medium-term case, but both warrant watching.

With guidance reaffirmed rather than raised — and the shares having already re-rated sharply — I’d expect a muted reaction. This is reassurance, not a fresh catalyst. I remain constructive: the defence engine is delivering, the order book offers strong forward cover, and the path to mid-teens returns looks intact, even if it runs through a few near-term potholes. Would be interesting to hear the management’s commentary latery today