Shares in air quality solutions supplier Volution jumped more than five per cent this morning after the group posted its half-year results, which came in ahead of expectations.
Covering the six months to 31 January, the firm reported a 13 per cent increase in operating profit as its operating profit margin climbed from 21.1 per cent a year ago to 22.4 per cent.
The firm’s strong performance in UK residential sales and recent acquisitions offset weaker results in continental Europe.
“The growth from the three recent acquisitions, combined with the regulatory drivers – especially in the UK – remain supportive,” said Peel Hunt analysts Clyde Lewis and Sam Cullen.
Group revenue grew 6.3 per cent throughout the year, though only 0.9 per cent of this was organic, with the rest coming from the acquisitions.
Volution also argued that it now had “regulatory and consumer tailwinds” and had been making “significant” new product launches, primarily focused on heat recovery solutions.
“This was another set of good results from Volution, with regulatory drivers and acquisitions funded from strong free cash generation more than offsetting soggy markets,” added the Peel Hunt analysts.
“We expect more regulation and acquisitions to come,and believe markets should not get much worse from here.”
Liberum analysts Edward Prest and Joe Brent agreed, describing the results as displaying a “strong operating margin and cash conversion”.
CEO Ronnie George said: “We made strong progress in the first half of the year, against a backdrop of higher interest rates and weaker new build demand. UK residential was once again the standout performer, with tighter regulation and strong social housing demand continuing to drive activity levels.”
“With our diversified geographic and end-market positioning, and agile business model, along with favourable regulatory trends and the increasing importance of indoor air quality, Volution remains well positioned to continue growing shareholder value into the future.”