Revenues at industrial parts distributor Brammer (BRAM) hit a record high following the integration of the Buck & Hickman acquisition, but cuts were required towards the end of the year to adjust to slowing growth and difficult economic conditions in Europe. Profitability wasn't sacrificed for growth though as operating margins hit a new high, up from 5.6 per cent to 5.8 per cent, and underlying operating profits increased by 17 per cent to £37.2m.
Ian Fraser, chief executive, said that Brammer was coping with weakening sales in bearings, down 7.6 per cent, by focusing on sales to existing key clients, up 9.8 per cent and moving into more defensive industries like food and drink, and packaging. This wasn't enough to entirely offset the sharp slowdown in organic sales per working day which declined 0.7 per cent in the final quarter, having reported growth of 9.4 per cent in the first quarter. Brammer took a £6.4m exceptional charge, including £4.8m for restructuring and the balance on the ongoing Buck & Hickman integration.
Broker Espirito Santo anticipates downgrading 2013 revenue growth forecasts from 6.8 per cent to flat, but thinks currency and margin improvement will leave adjusted pre-tax profits forecasts unchanged at £37.7m, giving EPS of 23.4p (2012: £34.5m and 21.9p).
BRAMMER (BRAM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 350p | MARKET VALUE: | £414m | |
| TOUCH: | 345-350p | 12-MONTH HIGH: | 384p | LOW: 220p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 21 | |
| NET ASSET VALUE: | 103p* | NET DEBT: | 44% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 478 | 18.9 | 17.4 | 5.5 |
| 2009 | 426 | -1.5 | 0.1 | 5.5 |
| 2010 | 468 | 19.3 | 13.0 | 6.6 |
| 2011 | 572 | 24.5 | 16.8 | 8.4 |
| 2012 | 640 | 26.8 | 16.9 | 9.4 |
| % change | +12 | +9 | +1 | +12 |
Ex-div: 5 Jun Payment: 2 Jul *Includes intangible assets of £109m, or 93p per share. | ||||
