Plastic coating and filter supplier
Filtrona also announced the acquisition of Michigan-based industrial parts distributor Reid Supply, which chief executive Colin Day views as "an excellent addition to the Protection and Finishing Products (PFP) division". Filtrona will pay up to $32m (£19m) for the business.
The stand-out performer was the PFP division, which increased underlying revenues by over 17 per cent and operating margin by 2.3 percentage points to produce a 36 per cent surge in operating profit, to £19m. The business serves a broad base of customers with a rapid supply of primarily plastic products for protection and finishing applications in industries such as hydraulics, pneumatics, oil and gas and electrical controls. Mr Day was keen to point out the turnaround in the cigarette filter division, which reported revenue up 1 per cent to £102m, reversing a 4 per cent decline in the first quarter.
Filtrona also announced new five-year borrowing facility of £320m and, with net debt reduced by £9.3m to £81.5m, reflecting a 72 per cent rise in operating cash flow to £43m, the business has ample funding for further deals.
BofA Merrill Lynch upgraded full-year EPS forecasts by 5 per cent to 24.1p (from 21p in 2010).
|ORD PRICE:||323p||MARKET VALUE:||£673m|
|TOUCH:||319-324p||12-MONTH HIGH:||387p||LOW: 224p|
|DIVIDEND YIELD:||2.9%||PE RATIO:||14|
|NET ASSET VALUE:||102p||NET DEBT:||37%|
|Half-year to 30 Jun||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
Ex-div: 28 Sep
Payment: 28 Oct
*Includes intangible assets of £107m, or 51p a share
Filtrona shares trade on a reasonable 12 times 2012 earnings estimates, which factors in a cautious 7 per cent earnings growth next year. So, even with the macro environment uncertain, the shares continue to offer scope for medium-term upside. Good value.
Last IC view: Good value, 296p, 25 Feb 2011