Packaging materials company API (API) is up for sale and has already received "a number of indicative offers". A sharp increase in first-half profits will have impressed potential buyers and revised proposals should be on management's desk by the end of December. However, they will also be aware that demand has slowed at the core laminates division and a big tobacco contract must ramp up soon.
A weak euro offset higher volumes, so revenue was flat overall, although raw material costs fell sharply and API kept a tight grip on outgoings elsewhere. That helped net operating margin rise by over 200 basis points to 8.5 per cent and underlying operating profit was up a third at £5m. Work on packaging for Sensodyne toothpaste and Neurofen headache pills helped grow revenue at the core laminates business by almost 10 per cent to a record £30m. Operating profit of £4.1m was 43 per cent higher than last year, too, despite delays in getting that major supply contract up and running, which is now expected to ramp up late in the fourth quarter.
Elsewhere, lower costs made up for weaker foil sales in both Europe and the Americas, so profits rose sharply. A slump at the holographics business was disappointing - ending a project with the laminates unit accounted for much of it - but winning new business in the security sector is proving hard work, too.
API (API) | ||||
|---|---|---|---|---|
| ORD PRICE: | 69p | MARKET VALUE: | £52.9m | |
| TOUCH: | 68-70p | 12-MONTH HIGH: | 73p | Low: 36p |
| DIVIDEND YIELD: | na | PE RATIO: | 9 | |
| NET ASSET VALUE: | 31p | NET DEBT: | 22% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 58.5 | 2.88 | 3.6 | nil |
| 2012 | 58.8 | 3.73 | 5.0 | nil |
| % change | - | +30 | +39 | - |
*Includes intangible assets of £5.2m, or 7p a share | ||||
