Specialist printer group Domino Printing (DNO) saw underlying pre-tax profit fall 10 per cent at the full-year stage to £35.3m - reflecting reduced customer spending in Europe and China. Equipment sales, which generate 43 per cent of group turnover, fell 1 per cent and management says that sales cycles have slowed, with fewer larger orders coming through.
Managing director Nigel Bond reckons lacklustre sales makes the need to invest in new products even more urgent - although that could mean lower profit margins in the near-term. "In recent years we've managed to boost the adjusted operating margin from 13 per cent to 19 per cent, but investment in new products, and flat sales, means it's down 7.2 per cent," he says. "It may fall further next year."
Domino boosted research & defence spending by 9 per cent, to £16.7m and new product iterations include an expanded fluids range, plus a new ink-jet coding system for the egg market. Mr Bond expects this year's acquisitions of Graph-Tech and PostJet to also help Domino capitalise on digital print opportunities. But progress at US group Ten Media, in which Domino has a 14.85 per cent stake, has been slower than expected. Ten focuses on supplying compliance and traceability systems to the US egg industry, but has been beset with technical difficulties.
Broker Jefferies forecasts adjusted pre-tax profit of £55m for 2013, giving EPS of 36.3p (2012: £53.7m/35.7p).
DOMINO PRINTING SCIENCES (DNO) | ||||
|---|---|---|---|---|
| ORD PRICE: | 590p | MARKET VALUE: | £657m | |
| TOUCH: | 587-590p | 12-MONTH HIGH: | 675p | LOW: 437p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 191p* | NET CASH: | £13.6m | |
| Year to 31 Oct | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 253 | 25.2 | 15.3 | 11.80 |
| 2009 | 256 | 28.0 | 17.8 | 13.00 |
| 2010 | 300 | 52.1 | 34.3 | 15.62 |
| 2011 | 314 | 57.4 | 37.2 | 18.75 |
| 2012 | 312 | 53.9 | 36.9 | 20.63 |
| % change | -1 | -6 | -1 | +10 |
Ex-div: 6 Mar Payment: 9 Apr *Includes intangible assets of £109m, or 98p a share | ||||
