Straight's first-half results reflect a period of transition for the supplier of environmental products, such as wheely-bins and composting containers.
To begin with, the revenue fall reflects a change in a distribution agreement with a former partner - that meant a significant volume of low margin wheely-bin sales were taken out of the picture. But improved sales of higher margin products helped to support profitability. And the second half should tell a very different story, with Straight having bought out its former distribution partner, Helesi, which will bring the wheely-bins back into the mix, but at higher margin than before. Straight has also snapped-up one of its main suppliers of plastic moulded products, giving it control over more of its manufacturing and more of its potential margin. The group boasts a healthy order book, too.
The business has also become more diversified after being burnt in the past by a reliance on too few end-markets. Although management maintains that the UK municipal sector is continuing to hold-up well with no hit yet from government cost-cutting measures.
Astaire Securities expects adjusted full-year pre-tax profits of £1.9m, giving adjusted EPS of 12.2p (2009: £1.6m/10.1p).
| ORD PRICE: | 109p | MARKET VALUE: | £12.5m | |
| TOUCH: | 106-111p | 12-MONTH HIGH: | 111p | LOW: 83p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 88p* | NET CASH: | £0.4m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 17.2 | 0.95 | 5.90 | 1.30 |
| 2010 | 13.2 | 0.85 | 5.30 | 1.35 |
| % change | -27 | -11 | -10 | +4 |
Ex-div:17 Nov Payment:17 Dec *Includes intangible assets of £4.7m or 41p a share | ||||
