GOOCH & HOUSEGO PLC: Results for the Six Months Ended 31 March 2026

Gooch & Housego PLC, or G&H, reported a strong first half for FY2026, combining double digit revenue growth with a record order book and further progress in reshaping the business towards higher margin, technology-led markets. The period was marked by particularly strong momentum in aerospace and defence, early signs of recovery in semiconductors, and continued investment in photonics capability across the group.

Group revenue rose 15.5 per cent to £81.9 million, up from £70.9 million a year earlier. Adjusted operating profit increased 16.9 per cent to £7.2 million, while the order book climbed to £167.3 million, giving the company near full revenue cover for FY2026. Despite this progress, management was clear that the operating environment remains complex, with supply chain pressure, geopolitical uncertainty and some temporary disruption in life sciences all still requiring close attention.

For investors, the half year update offers a useful window into a business that is becoming more concentrated on markets where precision optics and photonics command stronger margins, longer programme lives and deeper customer relationships.

Table of Contents

• A business built around advanced photonics
• Headline financial performance
• Cash flow, debt and balance sheet position
• Aerospace and defence becomes the primary growth engine
• Industrial markets show early recovery, especially semiconductors
• Life sciences had a difficult half, but management expects recovery
• Strategy remains focused on margin improvement
• Acquisitions are opening commercial opportunities
• R&D investment underpins the next phase of growth
• Risks investors should keep in focus
• Outlook for FY2026 and beyond
• FAQ

A business built around advanced photonics

G&H operates in specialist photonics, designing and manufacturing optical components, subsystems and integrated solutions for demanding applications. Its capabilities span acousto-optics, electro-optics, fibre optics and precision optics, supported by vertically integrated manufacturing that includes crystal growth, fabrication, ultra-precision polishing, thin film coatings and clean room assembly.

The company’s technology reaches a broad range of end markets, including:

• Aerospace and defence
• Industrial and semiconductor
• Life sciences and medical diagnostics
• Aviation, space and sensing

The strategic theme running through the latest results is straightforward. G&H is trying to improve returns by directing more of its capital, engineering effort and commercial focus towards markets where its differentiated optical expertise has greater pricing power and more sustainable long term demand.

Headline financial performance

The first half numbers showed clear progress.

• Revenue increased to £81.9 million, up 15.5 per cent year on year
• Organic revenue growth at constant currency was 9.1 per cent
• Adjusted operating profit rose to £7.2 million from £6.2 million
• Adjusted profit before tax increased 13.9 per cent to £5.8 million
• Adjusted basic EPS rose to 16.4 pence
• Interim dividend was held at 4.9 pence per share

Gross margin eased by 100 basis points to 29.4 per cent. This reflected a mix of positives and negatives. Operational improvements helped, but these were offset by softer mix in parts of fibre optics and life sciences, as well as continued shortages of important materials, especially germanium.

Even so, adjusted operating margin improved slightly to 8.8 per cent from 8.7 per cent. That may look modest at group level, but it conceals a much more significant shift beneath the surface. Aerospace and defence profitability improved sharply, and that is increasingly important because the segment is now the largest contributor to group revenue.

Cash flow, debt and balance sheet position

Cash generation improved in the period. Net cash from operating activities rose to £3.9 million, compared with £2.6 million in the prior year period, and total cash generated from operating activities reached £1.8 million.

Working capital still absorbed cash, though less sharply than in the comparable period. The increase was £4.9 million against £6.7 million a year earlier. Inventory remained an important factor, with G&H deliberately increasing strategic stock holdings, including germanium, in response to supply uncertainty. Receivables also rose materially after a strong March trading month, although much of that balance had already converted into cash early in the second half.

Capital expenditure increased to £4.3 million. The spending was directed towards two main objectives:

• Supporting the company’s six priority R&D workstreams
• Adding machinery and capacity to accelerate production and improve efficiency, particularly in UK and US aerospace and defence facilities

Net debt, excluding lease liabilities, rose to £36.6 million from £29.9 million at the prior year end. Including leases, net debt stood at £49.8 million. Leverage remained comfortable at 1.5 times EBITDA, well below the banking covenant limit of 2.5 times.

The group also expanded its committed facilities from US$60 million to US$70 million, giving greater flexibility to make strategic inventory purchases when necessary. That decision reflects the reality of today’s supply chains. In specialist manufacturing, resilience sometimes requires cash to be deployed before certainty is available.

Aerospace and defence becomes the primary growth engine

The clearest feature of the half year performance was the strength of aerospace and defence.

Segment revenue increased to £35.6 million, up 51.7 per cent from £23.5 million in the same period last year. On an organic constant currency basis, growth was still an impressive 26 per cent. Just as important, profitability improved dramatically. Operating profit rose to £3.6 million, compared with £0.6 million a year earlier and a loss in the equivalent period of 2024. Operating margin reached 10.2 per cent, an improvement of 760 basis points year on year.

This matters because G&H’s aerospace and defence business was not performing well several years ago. The current result indicates that the turnaround has gained real traction.

Several factors drove the improvement:

• A more focused go-to-market approach across regions
• Successful transition of new projects into volume production
• Better productivity and throughput at key sites
• Benefits from acquisitions including Artemis, Phoenix Optical and Global Photonics
• Strong customer demand in Europe and North America

G&H highlighted activity in a broad set of defence and aerospace applications, including sighting systems, periscopes, target designation, countermeasures, navigation, range finding, advanced optomechanical subsystems and space based optical communications. It is also seeing higher demand for infrared lens systems and optical assemblies used in counter unmanned aerial systems, short range air defence and near Earth orbit applications.

There was also growing involvement in laser directed energy programmes, where precision optical subsystems are required for next generation land and naval defence technologies.

Outside pure defence, commercial aviation is supporting demand for ring laser gyroscope products as aircraft production ramps up. Improvements at the company’s Moorpark facility have helped increase throughput to meet these requirements.

The order book reinforces the positive picture. Aerospace and defence orders reached £73.8 million by the end of March, up 38 per cent year on year and representing 44 per cent of the group total. Management expects further growth in the second half as additional multi year defence programmes are secured.

Industrial markets show early recovery, especially semiconductors

The industrial segment delivered £30.3 million of revenue, broadly flat year on year. Adjusted operating profit also held steady at £3.8 million, with operating margin at 12.7 per cent.

That stable outcome masks a market in transition. While overall growth was muted in the first half, G&H reported improvement in industrial laser and semiconductor activity, with semiconductor now showing genuine signs of recovery. This is important because semiconductors are one of the group’s key structural growth markets and a significant area for photonics-enabled components and modules.

Order intake in industrial was especially encouraging. The order book rose 49.2 per cent year on year to £56.1 million and was also sharply higher than at September 2025. Demand came from microelectronics, subsea data cable sensing and semiconductor processing.

The company has also been reshaping this segment operationally. Production of certain high reliability fibre coupler products has been transferred to qualified contract manufacturing partners, freeing internal capacity for more complex fibre optic assemblies and modules. Because of contract timing, module production was lower in the first half, but this is expected to rise in the second half as higher value work ramps.

For investors, the central question here is whether the semiconductor recovery proves durable. If it does, G&H could benefit from having two meaningful growth engines at once: aerospace and defence on one side, and industrial photonics, especially semiconductor-related demand, on the other.

Life sciences had a difficult half, but management expects recovery

Life sciences was the weak point in the first half. Revenue declined 7.7 per cent, and operating margin fell sharply to 4.6 per cent from 12 per cent a year earlier.

The decline was caused by a combination of temporary issues rather than a structural deterioration in the business.

In medical diagnostics, some customer programmes were delayed as qualification, installation and deployment took longer than expected. Elsewhere, certain in vitro diagnostics products remain in the clinical trial or regulatory phase for longer than planned, meaning production volumes are now expected to contribute from FY2027 rather than earlier.

The group also faced disruption in its pockels cell product lines for medical and aesthetic laser markets. An expected surge in final demand ahead of product end-of-life coincided with shortages in materials and lower crystal growth yields at the Cleveland facility. G&H has responded by qualifying alternative material sources and working to improve in-house yields. Output began to improve towards the end of the second quarter and progress has continued into the third quarter.

Management expects life sciences margins to recover to more normal levels in the second half, with broader normalisation into FY2027. The company also made clear that life sciences remains strategically important, even if it is now the smallest of the three segments. Its biophotonics capabilities still support attractive applications such as optical coherence tomography, microscopy and point of care diagnostics.

Strategy remains focused on margin improvement

G&H’s medium term ambition is to achieve mid-teen returns, and the strategy is aimed squarely at that objective. The approach rests on four priorities:

1. People through a high performance, purpose-led culture
2. Operational self-help to improve customer experience and execution
3. Better deployment of advanced photonics technology to speed up time to market
4. Disciplined allocation of resources across both organic and acquisition-led growth

This is not just a broad mission statement. It is visible in the current portfolio choices. G&H is investing more heavily behind higher margin products and sectors, addressing underperformance in weaker areas, and using bolt-on acquisitions to strengthen specific capabilities and regional manufacturing footprints.

The aerospace and defence turnaround is the clearest example of this strategy in action. Management said returns in that segment have improved by more than 18 percentage points since the new strategy began, helped by operational improvements, stronger cyber compliance, tighter supply chain management and more disciplined product introduction.

Acquisitions are opening commercial opportunities

The integration of Phoenix Optical and Global Photonics is now largely complete. These acquisitions, along with Artemis, have expanded G&H’s defence-oriented manufacturing and technical capabilities at a time when allied nations are increasingly focused on trusted, regionalised supply chains.

One of the more notable comments in the update was that the acquired businesses appear to be generating more commercial opportunity and stronger capability synergies than originally expected. Financial performance is slightly behind initial expectations because more operational improvement is still required, but the underlying demand potential seems greater than first assumed.

That distinction matters. It suggests the issue is not market appetite but execution. In fact, management said the order books of the two most recent acquisitions have more than doubled under G&H ownership.

Strategically, the acquisitions also give the group a stronger transatlantic platform:

• UK capability aligned to Western European defence requirements
• US manufacturing capacity that supports demand where domestic sourcing is a prerequisite

That should strengthen G&H’s relevance to major defence primes and government-backed programmes.

R&D investment underpins the next phase of growth

Research and development spend increased by £0.4 million to £3.9 million in the first half. The investment is focused on six priority programmes that management believes can generate more than £50 million of margin-accretive revenue in the medium term.

These efforts span some of the most attractive parts of the photonics market. G&H pointed to progress in next generation fibre optic modules for semiconductor fabrication, high reliability submarine amplification, environmental sensing and medical diagnostics.

The group also highlighted development work in thin film lithium niobate in the US. This technology has potential applications in electronic warfare, AI data centres and quantum systems, all of which sit within high growth and technically demanding markets.

The key investment case point is that G&H is not relying solely on cyclical recovery or acquisition synergies. It is also trying to build a future product pipeline that can lift both revenue quality and margin profile.

Risks investors should keep in focus

The company reaffirmed full year expectations, but it also acknowledged near term execution risk. Several issues deserve close monitoring:

• Germanium supply remains uneven, with availability and delivery still volatile
• Geopolitical disruption continues to affect global supply chains and input planning
• Life sciences recovery still needs to translate from operational fixes into financial normalisation
• Acquisition execution must convert strong opportunity into sustainable margin improvement
• Working capital discipline will matter as growth, inventory strategy and cash conversion interact

These are not trivial issues. For a company with specialised manufacturing processes and dependency on certain hard-to-source optical materials, supply chain shocks can affect margin, delivery timing and customer confidence. The company has taken action through strategic inventory purchases and supplier engagement, but the situation remains fluid.

There is also a broader question around how quickly the stronger aerospace and defence order book converts into high quality earnings, especially as some contracts are long term and production ramp-ups can place pressure on operations before benefits fully emerge.

Outlook for FY2026 and beyond

Management’s confidence rests on three pillars: a record order book, stronger positioning in structurally attractive end markets, and better alignment of the portfolio towards higher margin opportunities.

The group entered the second half with £167.3 million in orders and more than £100 million of first half order intake, both record levels. That gives unusually strong visibility for the rest of the financial year. Aerospace and defence demand remains firm in both Europe and the US, while semiconductor markets are beginning to recover. Life sciences should improve as temporary disruptions ease.

The broader investment case is increasingly shaped by photonics exposure to long duration themes:

• Defence modernisation
• Semiconductor complexity and fabrication demand
• AI and data communications infrastructure
• Medical diagnostics and biophotonics
• Space and high reliability sensing applications

G&H appears to be positioning itself as a trusted provider of not only components but integrated optical systems, which could support better customer stickiness and stronger margins over time.

Still, investors may reasonably want more evidence on a few points over the coming periods. Can life sciences recover as expected? Will semiconductor demand continue to build? Can aerospace and defence margins keep rising as volume grows? And can working capital improve without weakening supply resilience?

The first half of FY2026 does not answer all of those questions, but it clearly moves the story forward. G&H is showing stronger commercial momentum, particularly in defence, and the shape of the business is becoming more aligned with the company’s medium term return ambitions.

FAQ