Cookson’s shares bounced on these results, although the return to profit was exactly as management disclosed in a . Investors can thank the tax man: with a substantial drop in the tax rate to 21.1 per cent, the steel-products group published even better post-tax results than expected.
After a torrid 2009 – when it was forced into an emergency rights issue to digest an ill-timed acquisition – Cookson is now well into the recovery phase. The core ceramics division, which sells clay consumables to steel producers, grew revenues 32 per cent thanks to the rebound in global steel production. Meanwhile, underlying sales were 18 per cent higher in the electronics division, thanks to particularly buoyant conditions in the Far East, which now accounts for 31 per cent of group sales.
Management officially expects "mid-single digit" growth in steel production this year, but chief executive Nick Salmon now thinks that might prove too cautious. The foundry-castings business also has further recovery potential, with 2010 sales still 17 per cent below the 2008 peak.
Broker Investec expects adjusted pre-tax profits of £254m this year, giving EPS of 66.9p (from £222m and 61.5p in 2010).
COOKSON GROUP (CKSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 698p | MARKET VALUE: | £1.93bn | |
| TOUCH: | 697-698p | 12-MONTH HIGH: | 716p | LOW: 365p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 453p* | NET DEBT: | 26% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2006 | 1.59 | 106 | 30.6 | 10.0 |
| 2007 | 1.62 | 152 | 53.5 | 13.0 |
| 2008 | 2.20 | 89.6 | 32.7 | 8.8 |
| 2009 | 1.96 | -20.9 | -17.8 | nil |
| 2010 | 2.55 | 189 | 53.0 | 11.5 |
| % change | +30 | - | - | - |
Ex-div:18 May Payment:06 Jun *Includes intangibles of £1.14bn or 411p per share | ||||
