Analysts scrambled for their red pens after Cookson missed City forecasts, mainly due to losses at its solar business and a £4m currency hit, and the industrial materials firm warned the next six months wouldn't be any easier. Investor hopes now rest largely on a strategic review due to complete by the end of the year. If a break-up plan is given the green-light, a re-rating should follow.
A slump in demand for crucibles used to make solar panels halved revenue at the tiny Fused Silica operation, leading to losses of £5m (2011: £8m profit). Still, shutting a factory in the Czech Republic should limit losses to £1m in the second half ahead of a possible recovery next year. Weakness here explains the 4 per cent decline in sales and 12 per cent drop in trading profit at the core engineered ceramics unit. Economic gloom in Europe points to a "somewhat softer" second half for steel and foundry work, too.
Lower material prices and exiting commoditised lines hurt revenue at the higher-margin electronics division. However, supplying all the solder for Apple smartphones and tablet devices should guarantee big profits in the run up to Christmas. Hopes are also high for the smaller precious metals processing unit.
Bank of America Merrill Lynch expects a drop in adjusted full-year EPS to 68.4p, from 70.4p in 2011.
COOKSON (CKSN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 545p | MARKET VALUE: | £ 1.52bn | |
| TOUCH: | 545-546p | 12-MONTH HIGH: | 755p | Low: 386p |
| DIVIDEND YIELD: | 4% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 453p* | NET DEBT: | 35% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 1.42 | 120 | 31.6 | 7.25 |
| 2012 | 1.30 | 93.5 | 23.0 | 7.50 |
| % change | -8 | -22 | -27 | +3 |
Ex-div:12 Sep Payment:15 Oct *Includes intangible assets of £1.09bn, or 391p per share | ||||
