Gooch & Housego FY25 trading momentum holds up despite headwinds
Gooch & Housego (AIM: GHH) has delivered a solid full-year trading update for the 12 months to 30 September 2025. Momentum from the first half carried through H2, even with the familiar mix of macroeconomic and geopolitical bumps in the road.
The headline: revenues and adjusted profit before tax (adjusted PBT) are expected to be broadly in line with the Board’s expectations, albeit with moderately higher non-underlying costs from acquisitions and restructuring. The full results will land on 2 December 2025.
Segment performance: where growth showed up
Industrial photonics: subsea strength offsets laser softness
Industrial revenues were mixed. Fibre optic couplers and modules used in subsea data networks grew well, counterbalancing broadly flat sales to industrial laser customers. Management notes early signs of a semiconductor recovery, but the near term remains unpredictable due to supply chain and tariff issues.
My take: subsea demand feels structurally supported by global data traffic and cable investment, which is a handy hedge while lasers and semis find their feet. Customer activity picked up towards year-end, which is encouraging for FY26.
Life Sciences: phasing boost and a tactical product sunset
Life Sciences sales benefited from customer phasing of several medical diagnostic programmes in Ashford, Kent. G&H also saw a positive response to a “last time buy” notice for its Pockels Cells used in medical lasers. Deliveries will run through the coming year, after which the Cleveland, Ohio site will shift capacity to crystals for broader optical applications.
Quick explainer: Pockels Cells are electro-optic devices used to precisely control laser beams. A last time buy is when a company ends production but offers customers a final chance to purchase.
Aerospace & Defence: strong demand meets added capacity
Aerospace & Defence delivered further revenue growth in H2, driven by strong demand for precision optics and advanced sighting and imaging systems on military platforms. Commercial aerospace remains supportive too, with healthy demand for ring laser gyro components.
Operational improvements and extra capacity added over the last couple of years are paying off here. This is the engine room of growth right now and looks set to stay that way into FY26.
Acquisitions: Phoenix Optical and Global Photonics add US horsepower
Integration is “proceeding to plan” for both Phoenix Optical and Global Photonics, acquired during FY25. The strategy is about speed to value within Aerospace & Defence, and there are already tangible signs:
- Phoenix integration is focused on germanium fabrication, with combined substrate and coating offerings now available to customers.
- Global Photonics adds cleanroom lithography, photolithographic reticle fabrication, ion beam etching and advanced thin film coatings. The Tampa facility has significant space to scale.
- Crucially, Global Photonics strengthens relationships with US defence prime contractors, particularly for laser protection filtering, periscopes and complex optical systems.
Customer feedback has been positive, and G&H is pursuing a number of new opportunities. If these convert, they should underpin the order book and mix in FY26.
Order book builds, but debt steps up with investment
The order book continues to trend up and provides useful visibility for the new year. Over 80% of it is for delivery in FY26, including the full-year impact of the acquisitions.
Net bank debt (excluding IFRS 16 leases) has increased, reflecting acquisitions and investment in inventory alongside solid underlying cash generation before non-underlying items. That is a deliberate choice to support delivery and growth, but it will put a spotlight on cash conversion in FY26.
| Key numbers | FY25 | Comparatives |
|---|---|---|
| Order book (30 Sep 2025) | £142.3m | £121.5m (31 Mar 2025); £104.5m (30 Sep 2024) |
| Net bank debt excl. IFRS 16 (30 Sep 2025) | £30.0m | £24.1m (31 Mar 2025); £16.0m (30 Sep 2024) |
| FY25 revenues | Broadly in line with expectations | Board expectations not disclosed |
| FY25 adjusted PBT | Broadly in line with expectations | Board expectations not disclosed |
| Delivery profile | Over 80% of order book for FY26 | – |
| Results date | 2 December 2025 | – |
Margins and accounting: a couple of nuances to watch
Management highlights operational improvements, proactive supply chain handling, targeted investment to enhance capability, and the capitalisation of overheads in inventory. Capitalising overheads means some production costs are carried on the balance sheet as inventory rather than expensed immediately, which can flatter near-term margins but reverses when the inventory is sold.
Non-underlying costs are set to be “moderately higher” due to acquisitions and restructuring. Adjusted PBT excludes such non-underlying items as well as amortisation of acquired intangibles and impairments. The underlying operational progress looks genuine, but the statutory P&L will carry more one-offs in FY25.
Outlook: A&D strength offsets subdued Industrial and Life Sciences
The order book and recent acquisitions underpin increased trading in FY26, partially offset by higher overheads. Aerospace & Defence demand is described as strong across the UK, USA and Europe. Industrial and Life Sciences face a subdued near-term outlook, with recovery timing uncertain due to supply chain and tariff challenges.
Semiconductors are showing early green shoots, with management expecting modest growth in the medium term. Given photonics is a key enabler in advanced semiconductor equipment, that could provide a useful tailwind if it broadens out in calendar 2026.
Why this update matters for investors
- Visibility is improving: a £142.3m order book with more than 80% scheduled for FY26 gives confidence on revenue flow.
- Mix is skewing to defence: high margin, high spec work in Aerospace & Defence is growing, amplified by US capability and customer access via Global Photonics.
- Cash discipline will be key: net debt has stepped up to £30.0m as G&H invested in inventory and deals. Strong cash generation in FY26 would de-risk the balance sheet.
- Industrial recovery optionality: subsea is offsetting laser softness now, with semis offering medium-term upside if the recovery sticks.
- Product strategy is evolving: the last time buy on Pockels Cells clears the decks in Cleveland for scaling crystal capacity used internally and for external customers.
Risks and watchouts
- Short-term demand uncertainty in Industrial and Life Sciences could linger longer than hoped if supply chain or tariff issues persist.
- Higher non-underlying costs will weigh on statutory earnings in FY25, even as adjusted profit holds in line.
- Integration risk: execution on Phoenix and especially the scale-up at Tampa will need tight delivery to capture the US defence opportunity.
- Inventory and capitalised overheads will need careful management to protect cash and margin quality.
What I will look for on 2 December
- Adjusted vs statutory PBT and a clear bridge showing non-underlying costs.
- Gross margin trends by segment, particularly Aerospace & Defence.
- Cash conversion, working capital movements and inventory levels.
- Net debt trajectory and any guidance on deleveraging in FY26.
- Order intake in Q4 and early Q1 FY26, plus any colour on US defence pipeline wins.
Bottom line: resilient, defence-led and building for FY26
This is a reassuring update. G&H delivered steady trading, expanded its order book, and is leaning into Aerospace & Defence with two well-targeted acquisitions. The price is higher non-underlying costs and a step up in net debt, but the strategic direction looks sound and supported by growing demand where it matters.
If the Industrial and Life Sciences recovery emerges through FY26 and semiconductor demand improves as expected, the company should have multiple levers for growth. For now, defence strength and order book visibility do the heavy lifting.
