A huge swing in fortunes for Trifast's long-suffering UK business hauled the manufacturer and distributor of industrial fastenings back into the black.
Last year's underlying loss of £0.5m in its home market swung to a £2.5m profit, after sales surged 23 per cent, a performance that even management expressed surprise at. Asia, where Trifast is both a manufacturer and distributor, remains the standout performer, growing revenues by 28 per cent and profits by 16 per cent, while the business all but broke even in Europe and the US.
Now two-thirds of the way into a three-year recovery plan, management said that "it's about the margin". At 4.1 per cent, Trifast is halfway towards its pre-credit crunch peak operating margin of 8.2 per cent, and further progress is promised. Sustainable double-digit earnings growth, price increases and more efficiency improvements should help towards this.
Strong trading momentum should also support the recovery. In May, monthly invoice revenue hit its highest since early 2008 and sales during the final quarter were up 10 per cent on the previous three months. Broker Arden Partners is impressed and admits its forecasts appears conservative. It currently expects pre-tax profits of £4.3m and EPS of 3.7p (from £3.8m and 3.2p in the year to March 2011).
TRIFAST (TRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 48p | MARKET VALUE: | £40.9m | |
| TOUCH: | 48-49p | 12-MONTH HIGH: | 54p | LOW: 29p |
| DIVIDEND YIELD: | nil | PE RATIO: | 25 | |
| NET ASSET VALUE: | 50p* | NET DEBT: | 17% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 132 | 5.43 | 4.70 | 2.43 |
| 2008 | 120 | 6.18 | 4.40 | 2.80 |
| 2009 | 105 | -11.0 | -13.50 | 0.93 |
| 2010 | 85.9 | -2.81 | -2.57 | nil |
| 2011 | 106 | 2.52 | 1.93 | nil |
| % change | +23 | - | - | - |
*Includes intangible assets of £16.5m, or 19p a share | ||||
