The difficult state of the global capital goods market was reflected in Domino Printing Sciences' first half. Equipment sales, which make up 40 per cent of the group's total revenues, fell 4 per cent leaving an indelible mark. In fact, difficult global conditions mean a recovery in the printing market is not expected imminently and could cause the shares to mark time.
Domino was hit by customers delaying investment decisions and choosing to run older equipment for longer. Chief executive Nigel Bond explained, "We aren't a cyclical business per se, but we are a capital goods provider, and with liquidity difficult, companies have put off investment decisions." Mr Bond added that some markets had benefited from weaker comparisons, such as the US, and said that costs have had to be carefully managed in order to maintain profit margins.
There was, however, good demand for thermal-transfer over-printing devices, particularly for printing on eggs, and order intake picked up as the six months progressed. Away from original equipment, the majority of Domino's sales are generated by consumables and spare parts, and this segment was stable.
Broker Fairfax noted the pressure on earnings in the short-term but maintained its forecasts for pre-tax profits of £56.7m for 2012, rising to £62.0m in 2013, along with EPS of 36.3p and 39.6p, respectively.
DOMINO PRINTING SCIENCES (DNO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 515p | MARKET VALUE: | £573m | |
| TOUCH: | 514-515p | 12-MONTH HIGH: | 714p | LOW: 425p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 180p* | NET CASH: | £19.6m | |
| Half-year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 156 | 27.1 | 17.2 | 6.58 |
| 2012 | 151 | 24.7 | 16.4 | 7.24 |
| % change | -3 | -9 | -5 | +10 |
Ex-div: 11 Jul Payment: 17 Aug *Includes intangible assets of £79.4m, or 71p a share | ||||
