Fenner’s (FENR) first-half figures missed analysts' forecasts at both the top and bottom line and, while the engineer insists that the second half will be better, there’s a lot to do and some sizeable potholes to navigate. A sharp drop in US coal volumes meant underlying pre-tax profit fell 26 per cent to £35.8m and broker Numis downgraded forecasts for the full-year by 10 per cent to £87.5m, giving adjusted EPS of 30.5p. It has cut estimates by 5 per cent for next year, too.
Australia takes much of the blame for that. After a strong first quarter, conditions have deteriorated amidst lower iron ore prices and a slow recovery in the cost of coal. That has affected demand among cash-strapped Australian miners for Fenner’s conveyor belts with an inevitable impact on pricing. Management admits both volumes and margins will struggle there in the second half, too, and possibly in 2014. US coal had the biggest impact on the industrial conveyor belts business during the half and underlying operating profit tumbled 28 per cent to £28.6m. Still, miners there are beginning to buy new belts again and orders are up sharply, says chief executive Nick Hobson. With destocking over, activity is also picking-up at the rubber seals and plastic parts division, Advanced Engineered Products (AEP).
FENNER (FENR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 368p | MARKET VALUE: | £713.2m | |
| TOUCH: | 367-368p | 12-MONTH HIGH: | 460p | Low: 327p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 15 | |
| NET ASSET VALUE: | 172p* | NET DEBT: | 49% | |
| Half-year to 28 Feb | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 412 | 41.7 | 14.8 | 3.50 |
| 2013 | 391 | 26.9 | 8.80 | 3.75 |
| % change | -5 | -35 | -41 | +7 |
Ex-div: 31 Jul Payment: 6 Sep *Includes intangible assets of £292.4m, or 151p per share | ||||
