Alumasc doubles up

Alumasc (ALU) has continued to repair its problematic precision engineering business and grow profits at the building products division. Strip out one-off costs and interim operating profit more than doubled to over £3.1m, and management is confident of hitting full-year targets, too. They’ve doubled the dividend to prove it, but a sudden slump in demand in Europe proves there’s no room for complacency.

Engineering losses may have shrunk to £0.3m (from a loss of £1m in the same period of 2011) and the division managed to break even in the autumn, but revenue tumbled 22 per cent to £15.2m and de-stocking during the second quarter tipped it back into the red. Still, building products are selling well and profits there jumped to £4m from just £1.7m a year ago. The first slug of cash from Alumasc’s £11m roofing and walling contract for the Kitimat smelter in Canada came through. So did demand for insulated render via the government’s Community Energy Savings Programme, and the £3.3m solar blinds project at Chiswick Park. There’s good order visibility, too. Alumasc already has £46m of work booked, and more of it from overseas. Its blinds are increasingly popular in the Middle East and France, and foreign airports and ports are looking at its special access covers and slot drains.

Broker Peel Hunt expects adjusted pre-tax profit of £4.6m for the full-year, giving adjusted EPS of 9.7p (£1.6m and 3p in 2012).

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