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Yule Catto transformation complete

RESULTS: Cost savings and further expansion in emerging markets will drive Yule Catto in 2012
March 14, 2012

Acquiring PolymerLatex and selling its pharma division may have made for a messy set of results, but Yule Catto's numbers were impressive nevertheless. Underlying pro-forma sales grew 18 per cent and pre-tax profit on the same basis rose by a quarter to £96m; lower raw material costs and a lag in passing them on offset the impact of customer de-stocking on fourth-quarter volumes. And it's made a "solid" start to 2012.

IC TIP: Buy at 228p

Bigger than expected cost savings from the PolymerLatex deal – £15m of annual savings already, rising to £25m in 2013 – will help margins, too. Supplying Malaysia's synthetic nitrile glove makers proved especially profitable, and extra capacity should be on stream by the year-end. Europe and North America, the cash generative 'engine room', posted double-digit growth too.

YULE CATTO (YULC)

ORD PRICE:228pMARKET VALUE:£774.9m
TOUCH:227-228p12-MONTH HIGH:145pLOW: 63p
DIVIDEND YIELD:1.5%PE RATIO:23
NET ASSET VALUE: 78p*NET DEBT:60%

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20070.5134.011.56.18
20080.6038.914.32.58
20090.547.142.60nil
20100.5754.220.72.60
20111.0639.49.803.50
% change+86-27-53+14

Ex-div: 8 Jun

Payment: 6 Jul

*Includes intangible assets of £411m, or 121p a share