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NANO

0.52%
NEUTRAL

Nanoco Group Reports H1 FY25 Results: Revenue Down, but Outlook Improving

Why we think this is neutral

Nanoco's H1 FY25 results present a mixed picture. On the negative side, revenue decreased by 13% to £3.4m, and the company reported an operating loss of £1.2m compared to a profit in the previous year. The loss of a significant European customer contributed to this decline. However, there are several positive factors to consider. The company is in advanced negotiations with a new major Asian chemical customer, which could drive future growth. Additionally, Nanoco expects revenue for FY25 to be ahead of current market expectations, indicating an improving outlook. The company has also successfully completed a strategic reorganization, reducing its cost base. While the cash position has decreased significantly, this was largely due to a planned return of capital to shareholders. The company's focus on new commercial opportunities and its confidence in achieving early product revenues by next calendar year suggest potential for future improvement. Given these offsetting factors, a neutral sentiment seems appropriate, reflecting both the current challenges and the potential for future growth.

Key Points

  • Revenue down 13% to £3.4m in H1 FY25
  • Operating loss of £1.2m compared to £2.4m profit in H1 FY24
  • Adjusted EBITDA decreased to £0.5m from £0.7m
  • Cash balance of £15.5m at period end
  • Cost base reduced to £0.5m per month
  • Advanced negotiations with new major Asian chemical customer
  • Expects to exceed FY25 revenue forecasts
  • Completed £33m capital return to shareholders
  • Progress on strategic options for potential business sale
  • Confident in early product revenues by next calendar year

Summary

The nanomaterial technology firm reported a 13% revenue decline and an operating loss, but expects to exceed FY25 market expectations. New customer negotiations and strategic repositioning offer potential for future growth.

Nanoco Group's H1 FY25 results show a 13% decrease in revenue to £3.4m and an operating loss of £1.2m, primarily due to the loss of a European customer. However, the company is making progress on several fronts:

  1. Advanced negotiations with a new major Asian chemical customer for SWIR sensor technology.
  2. Expectation to exceed FY25 revenue forecasts (currently £6.6m).
  3. Successful cost base reduction to £0.5m per month.
  4. Completion of £33m capital return to shareholders.
  5. Progress on strategic options with CDX Advisors for potential business sale.

Despite current challenges, Nanoco remains confident in its commercial potential, expecting early product revenues by next calendar year. The company's focus on image sensors and display markets, coupled with its strong IP portfolio, positions it for potential growth in rapidly expanding markets.

Key Dates

22 April 2025
Investor presentation via Investor Meet Company platform
Mid Q3 2025
Expected receipt of initial proposals from potential bidders for business sale
Late Q3 2025
Commencement of Phase 2 of JDA with Asian Chemical customer
Early 2026
Expected early product revenues from new commercial engagements
HALF YEAR