Oxford Instruments (LON:OXIG) said it delivered a stronger second half after a difficult start to the year, as improving demand from commercial semiconductor customers helped offset weaker academic markets and geopolitical uncertainty.
Chief Executive Richard Tyson told investors the company was “really pleased” with the full-year results, saying they capped “a good year” despite headwinds that particularly affected the Imaging & Analysis division early in the period. Tyson said the year ended “slightly ahead of expectations,” with quarter-on-quarter improvement in order intake and second-half orders up 8%.
Advanced Technologies benefits from semiconductor demand
Oxford Instruments reported the strongest momentum in Advanced Technologies, where order intake rose 28% for the full year. Tyson said the company had made “significant progress” shifting the division toward high-volume manufacturing customers, which accounted for all of the volume improvement.
Fry said demand from commercial customers, especially high-volume manufacturing applications, was a major contributor to the division’s growth. He cited equipment demand for datacom applications and augmented or virtual reality glasses, saying order intake for those two applications doubled from the prior year.
The division’s revenue was slightly lower for the year, as larger and more complex systems with longer lead times pushed revenue recognition into the fourth quarter. Fry said revenue recognition became more sensitive to customer readiness and Oxford Instruments’ own execution, and he acknowledged challenges on both fronts in the final quarter. However, he said the company had already seen “very strong revenue growth” in FY 2027 and expected “significant growth” in the division in the first half.
Fry said Advanced Technologies’ order book closed the year 25% higher than at the start of the year. After a “very sizable” order received early in FY 2027, the company said its order book supports the “vast majority” of its revenue expectations for the year.
Oxford Instruments expects high-teens revenue growth in Advanced Technologies in FY 2027 and said that growth should support “substantial progress” toward a 10% to 12% margin range. Tyson later said the company is raising its medium-term margin target for the division to 12% to 15%, as it sees potential for the business to move into the mid-teens over time.
Imaging & Analysis recovers after weak start
In Imaging & Analysis, Fry said order intake increased 1.9% for the full year, with second-half orders up more than 8%. Revenue declined 3% for the full year but returned to nearly 2% growth in the second half as orders recovered.
The academic market remained subdued, with orders from Imaging & Analysis academic customers down around 8%. Fry said non-U.S. academia fared slightly better, while growth was concentrated in commercial research and development, notably semiconductors.
Despite the revenue decline, Fry said operating profit advanced on a constant currency basis and margins improved. The improvement was driven mainly by cost benefits from restructuring in Belfast and other margin initiatives that helped offset inflation.
Tyson said the Belfast business had been affected by weakness in healthcare and life sciences and had struggled operationally. The company reduced the workforce there by 20% and, together with operational efficiencies, removed GBP 6 million from the cost base. Tyson said the team also reduced inventory by more than double its original GBP 2.5 million target, cut repair times by 30% and reduced repair backlogs by 50%.
Oxford Instruments expects Imaging & Analysis to deliver low single-digit revenue growth in FY 2027, despite continued macroeconomic uncertainty.
Portfolio reshaped after NanoScience sale
Management emphasized the strategic impact of the January divestment of the NanoScience business, which is now reported as a discontinued operation. Tyson said the sale generated net proceeds of GBP 42 million, freed up management time and improved the group’s focus and capital allocation options.
Fry said the disposal also changed the prior-year comparison, with FY 2025 adjusted operating margin restated from 16.4% as previously reported to 17.9%. From that higher base, the company delivered a further 30 basis points of margin improvement at constant currency.
Currency remained a headwind, reducing FY 2026 profit by around GBP 4.5 million. Fry said the company expects an additional GBP 3.2 million currency headwind in FY 2027 because hedge rates are less favorable.
Fry said adjusting items are expected to reduce significantly as recent transformation and restructuring actions are embedded, which should support cash generation and earnings per share. He also said the FY 2027 tax rate is expected to stabilize at about 24.5%, around 100 basis points below prior guidance, due to benefits from U.K. Patent Box arrangements.
Capital allocation focuses on investment, dividend and buybacks
Oxford Instruments said organic investment remains its top capital allocation priority. Fry said the company plans to allocate an additional GBP 10 million of free cash flow in FY 2027 to new capital expenditure and capitalized R&D tied to growth opportunities.
Those investments include software and artificial intelligence development for some Imaging & Analysis tools, semiconductor-focused solutions and Advanced Technologies capacity to support customer moves toward larger wafer sizes.
The company proposed a 6.3% dividend increase for the year. Fry said Oxford Instruments has also announced a GBP 100 million share buyback program, which was about two-thirds complete as of March 31 and is expected to finish by the end of the calendar year.
Management highlights semiconductor opportunity
Tyson said Oxford Instruments continues to focus on three core markets: materials analysis, semiconductors, and healthcare and life sciences. He described semiconductor demand as “exceptionally strong,” driven by AI-related data center demand as well as electrification and power applications.
Within Advanced Technologies, Tyson highlighted compound semiconductor opportunities in datacom, gallium nitride power devices, micro-LED and augmented reality. He said the company is supplying technology used in front-end processing, including deposition and etching systems, and cited customer examples including Coherent, Rohm and Rigetti.
During the question-and-answer session, Tyson said the large Advanced Technologies order received early in FY 2027 was one of several opportunities tied to customers building capacity for the next two to three years. He said similar-sized opportunities could emerge, depending on how customers choose to place demand and invest ahead of growth.
Asked about production capacity, Tyson said Oxford Instruments is working on operational improvements and incremental capacity additions for the second half of FY 2027. He said labor capacity typically takes three to six months to bring online, while the company is also working with suppliers to reduce lead times.
Tyson concluded that Oxford Instruments is entering FY 2027 in a strong position, with a simpler structure, improved operations and a larger opportunity in Advanced Technologies. “Oxford Instruments is in great shape,” he said.
