Another sharp increase in emerging markets sales, new higher-margin products, and impressive progress on its three-year plan, meant an impressive performance for engineer,
So-called “dynamic growth economies” swelled revenue by 23 per cent in 2011 and now comprise 25 per cent of the business. Sales to India jumped 30 per cent and China generates almost 10 per cent of the group total. These regions are now the biggest contributors to the thermal ceramics division, driving revenue there up 11 per cent to £400m and cash profit up 43 per cent. And it was here that the cash profit margin improved the most - up 270 basis points to 12.4 per cent - and where most end-markets are back to pre-recession levels. Demand for high temperature insulating material “Superwool” was crucial, too. In technical ceramics, meanwhile, demand for hard disc drive components helped push revenue up 14 per cent to £285m. While growth of over 35 per cent in China and Asia ensured double-digit gains at the advanced materials and technology (AM&T) division once the NP Aerospace unit is stripped out.
Broker Numis Securities expects underlying pre-tax profit of £128.5m for end-2012, giving underlying EPS of 31.4p (end-2011: £119.7m/29.9p).
|MORGAN CRUCIBLE (MGCR)|
|ORD PRICE:||351p||MARKET VALUE:||£965m|
|TOUCH:||350-351p||12-MONTH HIGH:||365p||LOW: 220p|
|DIVIDEND YIELD:||2.6%||PE RATIO:||13|
|NET ASSET VALUE||83p*||NET DEBT:||80%|
Emerging markets continue to race ahead and margins improved during the second half to 13 per cent. There's a healthy order book, too, yet - as Numis points out - the shares trade at a 12 per cent discount to the sector. Buy.
Last IC view: Good value, 342p, 27 July 2011