Scapa has a habit of beating City forecasts and, with the ink only just dry on latest estimates, has done it again. Another wave of cost-cutting at the adhesives and tapes firm improved margins and delivered a 34 per cent increase in underlying operating profit. Recent share price weakness on slow progress at the electronics division and jitters over Europe should only prove temporary.
Self-help remains the story here. Cost-cutting improved underlying trading margin by 130 basis points to 5.5 per cent, and £5.4m of sales from US healthcare firm WEBTEC made up for low-margin business elsewhere. It also chipped in £0.5m of profit and hauled divisional margin up to 13.9 per cent. The industrial unit, responsible for three-quarters of revenue, did well, too. Profit was up two-thirds to £7.2m, driven by more savings and sales of tape to the French construction industry and for insulating fibre optic cables. Losses at the electronics business were disappointing though, but the benefit of recent investment should be visible this year. Worries about Europe should be put into perspective, too. Yes, the region contributes over half of sales, but two-thirds of that is from more reliable customers in the UK, Germany and France.
Broker Arden Partners is looking for current year adjusted pre-tax profit of £11.5m and adjusted EPS of 4.8p (£9.5m and 4.2p in 2012).
SCAPA (SCPA) | ||||
---|---|---|---|---|
ORD PRICE: | 60.5p | MARKET VALUE: | £88.3m | |
TOUCH: | 59-62p | 12-MONTH HIGH: | 71p | LOW: 40.5p |
DIVIDEND YIELD: | nil | PE RATIO: | 13 | |
NET ASSET VALUE | 45p* | NET CASH: | £7m |
Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2008 | 170 | 7.4 | 3.1 | 0.75 |
2009 | 174 | -9.3 | 7.5 | nil |
2010 | 177 | -5.2 | -1.9 | nil |
2011 | 192 | 6.1 | 2.4 | nil |
2012 | 196 | 10.5 | 4.5 | nil |
% change | +2 | +72 | +88 | - |
*Includes intangible assets of £31.7m, or 22p a share |