Porvair growing nicely

Porvair 's solid figures sparked earnings upgrades and the momentum has carried through to the new financial year, with "healthy" underlying demand improving sales in December and January. Add in a $25m (£16m) 10-year contract supplying coolant filters for Boeing 787s and it's little surprise the share price reacted positively.

Much of the growth came from the smaller metals filtration division, where revenue rose 12 per cent to £25.9m and operating profit tripled to £1.5m. Operating margins improved, too – from 2 per cent to 6 per cent – reflecting greater emphasis on new and patented products and a manufacturing shift to China. Now, management wants 10 per cent. That's close to the 13 per cent at Porvair's microfiltration unit, where sales rose just 4 per cent to £42.2m. Still, strip out one-off costs and 15 per cent growth in aviation easily offset weakness at the water unit, helping drive underlying profit growth of 11 per cent to £6.1m. Energy was strong, too, and a deal with steel giant POSCO worth at least $10m has the order book at record levels.

After increasing forecasts 11 per cent for 2012, broker Peel Hunt expects adjusted pre-tax profit of £5m, giving adjusted EPS of 8p (from £4.5m and 7.3p in 2011).

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