Oxford Instruments orders rise 44% to £296m as datacentre chip makers buy its equipment

Orders at Oxford Instruments' Advanced Technologies division more than doubled to £132.2 million in the six months to 30 September, up from £58.6 million, as volume manufacturers bought its etch and deposition processes to make the high-speed optical devices used in datacentre and communications networks.

The division builds compound semiconductor fabrication equipment at Severn Beach and X-ray tubes at Scotts Valley in the US. Its revenue rose 26.4% to £58.9 million. For the scientific equipment maker as a whole, which was spun out of Oxford University in 1959, orders rose 44.2% to £296.0 million from £205.2 million and revenue rose 8.4% to £201.1 million.

The company put the demand down to investment in AI datacentres and a shift to larger indium phosphide wafers, an area where it says it has an edge. It has won orders from several new high-volume customers across different countries, and the division's planned revenue for the year to March 2027 is already fully covered by its order book, which runs well into the following year.

On the strength of that book, the company now expects Advanced Technologies revenue to grow by about 20% in the 2027-28 financial year, with its margin moving up into the 12% to 15% range it has set as a medium-term target. The division's adjusted operating margin was 7.5% in the half, against 2.1% a year earlier.

The rest of the group

Imaging and Analysis, the larger division, makes microscopes, scientific cameras and analytical instruments at sites including High Wycombe and Belfast. Its orders rose 11.7% to £163.8 million and revenue 2.4% to £142.2 million. Orders from commercial customers rose 20%, mainly for semiconductor and materials analysis work, and academic orders grew 2.8% at constant currency as growth in Asia-Pacific and Europe outweighed lower orders from US universities.

Across the group, adjusted operating profit rose 21.5% to £30.0 million and the adjusted operating margin widened to 14.9% from 13.3%. Statutory profit before tax was £27.9 million, against £20.3 million. Free cash flow came to £19.1 million and the company ended September with net cash of £74.8 million. It said trading for the full year was in line with market expectations, and its next update is due on Thursday 14 January 2027.

To keep up with demand, Oxford Instruments is signing long-term supplier agreements, holding more stock of key components and adding skilled production staff. Its internal Talent Academy for apprentices at Severn Beach has more than doubled in size.

The interim dividend rises to 5.8p a share from 5.4p. The company had completed £83.1 million of its £100 million share buyback by the end of September, expects to finish the remaining £16.9 million early in 2027 and then plans to extend the programme by £25 million to summer 2027.