Management claims of a satisfactory first half fell short of the usual ebullience we’ve come to expect from filters manufacturer, Porvair (PRV). It has been quieter in the US and weaker aluminium prices hurt the metals filtration division. Still, a healthy order book, and second-half growth expectations, have kept the upgrade cycle intact.
As is tradition, broker Peel Hunt upgraded its estimates and now expects full-year adjusted pre-tax profit of £7m, giving adjusted EPS of 11.3p (£6.3m/10.1p: 2012). Even those could prove conservative, admits the broker. A 7 per cent increase in (constant currency) half-year sales generated an extra 23 per cent of earnings and demand is "generally good" across the board, says chief executive Ben Stocks. Orders from energy and industrial customers are up in Europe and the US, and big contracts with POSCO, Reliance Industries and the UK government will contribute to the microfiltrations division for years. The unit grew revenue 15 per cent to £24.5m and operating profit rose 43 per cent. Despite problems with Boeing’s 787 jet, and US spending cuts, sales in the US grew 13 per cent to £16.5m, too - slightly faster than in Asia.
Revenue at the smaller metals filtration division fell 4 per cent and profit here dropped 11 per cent. Still, a return to sales growth in the second half looks likely, which should drop straight through to the bottom line. Comparables get easier, too.
PORVAIR (PRV) | ||||
|---|---|---|---|---|
| ORD PRICE: | 288p | MARKET VALUE: | £125m | |
| TOUCH: | 286-288p | 12-MONTH HIGH: | 320p | Low: 120p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 110p* | NET DEBT: | 6% | |
| Half-year to 31 May | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 35.9 | 2.41 | 4.00 | 1.00 |
| 2013 | 38.6 | 3.05 | 4.90 | 1.10 |
| % change | +8 | +27 | +23 | +10 |
Ex-div: 31 Jul Payment: 6 Sep *Includes intangible assets of £40m, or 92p per share | ||||
