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Europe holds back Interbulk

RESULTS: Europe’s struggling chemicals industry is Interbulk’s main source of income and could delay any significant recovery
December 10, 2012

The unresolved financial crisis in Europe hampered demand for chemicals in the region and is blamed for logistic firm Interbulk's (INB) weaker top line. Cutting debt and setting up a new bank facility slashed interest payments, so underlying pre-tax profit was flat at £5.2m, but another slump at the liquid bulk business meant the numbers weren’t so good at the operating level.

IC TIP: Hold at 7.25p

A slight recovery in the second quarter proved short-lived for the liquids division. Shaky demand for chemicals in Europe wiped 38 per cent off the unit's underlying operating profit to £7.8m. Add a £1m hit from the weak euro and group operating profits tumbled 14 per cent. Overbuilding tank containers in 2011 is still causing excess capacity issues, too, and last year’s costly fleet expansion means utilisation and margins are set to remain under pressure for at least the next 12 months. Once again, the dry bulk unit did best. Higher-margin food transport work grew by 8 per cent, driving divisional profit up by 57 per cent to £6.1m. Guidance is for more modest growth next year, but the slow-moving alliance with Sinotrans in China clearly has potential. Russia’s improving infrastructure and an existing on-site logistics deal with oil giant Sibur could open doors there, and the Middle East chemicals hub could be lucrative, too.

Trimming its forecasts for the second time in two months, Westhouse Securities expects adjusted pre-tax profit of £7m and EPS of 1.09p.

INTERBULK (INB)

ORD PRICE:7.25pMARKET VALUE:£ 33.9m
TOUCH:7-7.5p12-MONTH HIGH:8.37pLOW:   5.12p
DIVIDEND YIELD:NILPE RATIO:8
NET ASSET VALUE:18p*NET DEBT:84%

Year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20082400.720.27nil
2009232-2.75-0.79nil
20102731.770.63nil
20113005.381.11nil
20122804.890.93nil
% change-7-9-16-

*Includes intangible assets of £123m, or 26p per share