A year ago our headline was "Restructuring rescues Porvair" as it cut its US-based metals filtration workforce by some 40 per cent. That business remains a poor performer. But at least in the latest six months to end-May 2010 it reported a profit of £276,000 against a loss of £1.54m after allowing for £433,000 of exceptional layoff costs. But it's important to remember Porvair's basics. Firstly, it works in increasingly regulated businesses whether that is controlling emissions or waste; secondly many of its newly patented products took five years to develop but could be still in use for 25 years and, thirdly, and possibly most importantly, some 90 per cent of sales come from consumables. In its regulated businesses they are likely to be automatically changed once a year.
So Porvair is now in a "harvesting" stage when many years of R&D are starting to produce big pay-backs as long as it can protect patents and move into fast growing emerging markets. Over the year 23 per cent of sales revenues were attributable to "next generation" products. Key factors for continuing profits growth probably centre on high margin microfiltration of airline fuel and hydraulics as demand for US commercial airline flights recovers.
Broker Altium forecasts 12 months sales up from 55.2m to £59.4m, profits £600,000 ahead at £2.3m and adjusted earnings of 3.6p.
| ORD PRICE: | 67.5p | MARKET VALUE: | £ 28.4m | |
| TOUCH: | 66-69p | 12-MONTH HIGH: | 77.5p | LOW: 45p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 93p* | Net debt: | 59% | |
| Half-year to 31 May | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 27.0 | -599 | -1.00 | 1.00 |
| 2010 | 29.7 | 1280 | 2.10 | 1.00 |
| % change | +10 | – | – | – |
Ex-div:04 August Payment:10 September Sector: Chemicals. * Including £39.5m intangibles, or 10p a share | ||||
