Trifast's results reflect further progress on pricing, improved sourcing and sales, and importantly there is little sign of momentum slowing. The industrial fasteners firm is "comfortable" with market expectations, despite the eurozone sovereign debt crisis, and a new acquisition in Malaysia is highly complementary.
In the first half, underlying operating profit grew by a third to £2.67m, driven largely by a 63 per cent profit surge in the UK to £1.45m and 19 per cent increase in revenue to Europe and the US. A greater focus on the European motor industry and the company's restructured US division, now in profit, helped there. Those contributions were certainly needed as the Asian unit failed to trump last year's stellar performance.
Still, £14.4m of sales in the Far East was 10 per cent higher than sales in the second half of the financial year to March 2011. Renegotiating contracts and better sourcing aided margin recovery, and improvements will continue to come through during the second half. Buying high-tech fasteners maker Power Steel for a net £12.2m – partly funded by an £8m placing at 37p – will help. That deal was announced alongside these results and, with an adjusted pre-tax profit margin of 17 per cent, Arden Partners estimates that it will enhance group net margin by 1.1 percentage points in the year to March 2013. For the current year, the broker expects adjusted EPS of 3.6p (3.2p for 2011).
TRIFAST (TRI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 40p | MARKET VALUE: | £34.1m | |
| TOUCH: | 39-42p | 12-MONTH HIGH: | 54.75p | Low: 35p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 17 | |
| NET ASSET VALUE: | 52p* | NET DEBT: | 17% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 52.0 | 1.48 | 1.37 | nil |
| 2011 | 55.4 | 2.13 | 1.77 | nil |
| % change | +7 | +44 | +29 | – |
*Includes intangible assets of £16.4m, or 19p a share | ||||
