Industrial chemicals manufacturer Yule Catto presented a mixed picture with its half-year results, with a hefty dividend hike having been accompanied by eurozone-related pressures, over-capacity worries and aggressive competition in Asia. Despite this, management stuck to its guidance of full-year pre-tax profit of £96m, with cost savings helping the performance - savings should boost operating profit by £16m this year and by £6m in 2013. While, after sliding heavily since March, the shares are now looking too cheaply rated.
The nitrile latex business came under particular pressure with tough Asian markets pushing profits at the Asia and rest of the world unit down 42 per cent to £11m, on sales that dropped 11 per cent to £165m. Market share was mostly unaffected, though, and Yule Catto controls 30 per cent of the global nitrile market. Meanwhile, sales in the US and Europe were hit by eurozone worries, which helped volumes to slide 11.5 per cent, with sales down 9 per cent to £438m. However, cost-savings from the PolymerLatex acquisition boosted divisional operating profits by 22 per cent to £55.7m.
Peel Hunt left its full-year forecasts unchanged and expects pre-tax profit of £99m, giving EPS of 20.8p (2011: £84.8m/EPS 18.4p).
YULE CATTO & CO (YULC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 151p | MARKET VALUE: | £513m | |
| TOUCH: | 150-151p | 12-MONTH HIGH: | 257p | LOW: 126p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 81p* | NET DEBT: | 61% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 489 | 26.7 | 7.00 | 1.20 |
| 2012 | 571 | 38.2 | 8.10 | 2.20 |
| % change | +18 | +43 | +16 | +83 |
Ex-div: 10 Oct Payment: 08 Nov *Includes intangible assets of £387m, or 114p a share | ||||
